International Fragmentation of Production

International Fragmentation of Production

The Impact of Outsourcing on the Japanese Economy

Nobuaki Yamashita

Using state-of-the-art econometric tools, this book examines the implications of international fragmentation of production for the performance of the Japanese manufacturing industry.

Chapter 8: Conclusion

Nobuaki Yamashita

Subjects: asian studies, asian economics, economics and finance, asian economics, industrial economics

Extract

In the 1970s and 1980s production fragmentation – the cross-border splitting of the production process within vertically integrated manufacturing industries – was happening on a small scale, involving a limited number of developed and developing countries. Since then, transfers of manufacturing processes from developed into developing countries have been growing at a remarkable speed. This development was mainly due to the further reduction of trade and transportation costs, service-link costs, investment liberalization and technological advancements (see Chapter 2). In line with this global trend, international fragmentation of production has contributed to the further acceleration of the globalization process of Japanese manufacturing. The purpose of this book has been to examine the patterns, determinants and implications for host country trade and labour market performance in light of the Japanese experience, placed within a comparative perspective, drawing particularly on the US experience. The book began with a comprehensive interpretative survey of the theory of production fragmentation in order to place the empirical analysis in context. The empirical analysis was carried out in three stages. First, patterns and determinants of fragmentation trade by a comparative analysis of Japan and the USA were examined by using trade data compiled on the basis of the new commodity list of parts and components of manufacturing trade over the period 1988–2005. The focus of the next stage of analysis was on effects of fragmentation trade on the skills structure of manufacturing employment in Japan. This analysis was based on a panel data set covering 52 Japanese manufacturing industries...

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