Publication : Discussion Papers

Gains from Fragmentation at the Firm Level:Evidence from Japanese Multinationals in East Asia

Editor(s)/Author(s) : - 7 March 2009
Print Article      

Abstract


The unprecedented development of production networks in East Asia has been investigated, both theoretically and empirically, employing the conceptual framework of fragmentation theory and its extensions. However, the benefits of production fragmentation at the firm level, particularly benefits deriving from different location advantages, have never been directly measured empirically. This paper presents the very first attempt, to the authors' knowledge, to empirically capture the benefits of fragmentation. Specifically, using Japanese firm-level data, we find that the larger the gap in the capital-labor ratios between fragmenting firms' home and overseas activities, the more greatly their cost efficiency improves.

ERIA-DP-2009-07.pdf

Related Publications

Publication Innovation and Technology,ASEAN
Editor(s)/Author(s) : Lili Yan Ing,Ivana M 2 February 2023
Digital transformation (DX) is one of the most crucial innovations to have changed modern life over the last decade.(...)
Publication geographical simulation model,Industry,Connectivity,ASEAN
Editor(s)/Author(s) : Ikumo Isono,Satoru K 2 February 2023
 The war between Russia and Ukraine since February 2022 has triggered renewed concerns about global economic(...)