Abstract:
Our
discussion in the present paper builds upon our two earlier
analyses of international fragmentation (1990, 1998),
focussing upon the importance of service links in connecting
fragmented production blocks.
The next section of this paper probes the
fundamentals of the fragmentation process and how prices
may adjust in global markets. The key role of services and the
importance of increasing returns are highlighted in section 3.
Section 4 explores in more detail possible causes of the
increased degree of fragmentation now observed in world
markets. A phenomenon of utmost interest in current policy
debates is the effect of globalization on the distribution of
income within a country, especially in the United States.
Section 5 investigates the connection between fragmentation
and wage rates for less skilled workers. The final section of
the paper suggests various further consequences of the
fragmentation phenomenon, especially as regards the changing
nature of markets in the global economy.
Description:
Chapter 3 in: Arndt, S. W., & Kierzkowski, H. (2001). Fragmentation: New production patterns in the world economy. Oxford: Oxford University Press.
