Economics at your fingertips  

International Fragmentation: A Policy Perspective

Wilhelm Kohler ()
Additional contact information
Wilhelm Kohler: Department of Economics, Johannes Kepler University Linz, Austria,

No 2000-19, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: International fragmentation, or outsourcing, is often referred to as a distinctly novel feature in today's global economy. First observed in the US-Mexican context, the phenomenon is increasingly catching policy makers' attention also in Europe. As barriers between east and west are progressively removed, low wage countries in eastern Europe are likely outsourcing targets for western European firms. Against this background this paper provides a policy-oriented discussion of cross-border fragmentation. It starts with a precise definition of the phenomenon, putting it into the broader perspective of economic globalization. It then uses simple graphical tools to address, in a general way, several questions that appear relevant from western European point of view. Specifically, the paper idetifies conditions under which outsourcing is beneficial for a western country as a whole, and it highlights the internal redistributive effects associated with this gain. It then argues that preferential trading arrangements are formidable fragmentation barriers, particularly in Europe where a multiplicity of such arrangements has led to complex rules of origin. The efficiency loss from such barriers should provide a strong additional cause for a multilateral, as opposed to a regional, approach to trade liberalization.

JEL-codes: F11 F13 F19 (search for similar items in EconPapers)
Date: 2000-07
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria Contact information at EDIRC.
Bibliographic data for series maintained by René Böheim ().

Page updated 2021-04-08
Handle: RePEc:jku:econwp:2000_19