Globalization and the Evolution of the Supply Chain: Who Gains and Who Loses?

Masahisa Fujita and Jacques Thisse ()

No 4152, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper focuses on two distinct facets of globalization: the decrease in the trade costs of goods and the decline of communication costs between headquarters and production facilities within firms. When the unskilled have about the same wage in the two regions, the decrease of these costs fosters the gradual agglomeration of plants in the core region accommodating the headquarters. By contrast, when the wage gap is significant, the process of integration eventually triggers the relocation of plants into the periphery. In particular, when falling communication costs drives the process of relocation, the welfare of all workers living in the core goes down whereas the welfare of those who reside in the periphery rises.

Keywords: agglomeration; communication costs; headquarters; information technologies; plants; relocation; supply chain (search for similar items in EconPapers)
JEL-codes: F12 L13 R13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-net
Date: 2003-12
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Related works:
Working Paper: Globalization and the Evolution of the Supply Chain: who gains and who loses? (2004)
Working Paper: Globalization and the Evolution of the Supply Chain: who gains and who loses? (2003)
Working Paper: Globalization and the evolution of the supply chain: who gains and who loses ? (2003)
Journal Article: GLOBALIZATION AND THE EVOLUTION OF THE SUPPLY CHAIN: WHO GAINS AND WHO LOSES? (2006)
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