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

Jacques Thisse and Masahisa Fujita

No 4152, CEPR Discussion Papers from Centre for Economic Policy Research

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: Information technologies; Communication costs; Agglomeration; Headquarters; Plants; Supply chain; Relocation (search for similar items in EconPapers)
JEL-codes: F12 L13 R13 (search for similar items in EconPapers)
Date: 2003-12
New Economics Papers: this item is included in nep-geo and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: GLOBALIZATION AND THE EVOLUTION OF THE SUPPLY CHAIN: WHO GAINS AND WHO LOSES? (2006)
Working Paper: Globalisation and the evolution of the supply chain: who gains and who loses? (2006)
Working Paper: Globalization and the evoluton of the supply chain: WHO gains and who loses? (2006)
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)
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