The Emergence of International Fragmentation and Global Outsourcing of Production: Theories and Empirical Evidence

The emergence of international fragmentation of production as a contemporary phenomenon of international trade is evident from the rapid expansion of global production sharing and the impressive growth of trade in parts and components since the 1990s. Up until now, various studies have illustrated implications of fragmented technology from different perspectives. This paper presents both empirical observations and the latest theoretical findings. It shows in diagram how international fragmentation and global outsourcing of production can act like technological progress on economic growth, and how the decline of service costs contributes to the expansion of the global production sharing network.