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The international fragmentation of production: a multilevel network approach

The international fragmentation of production: a multilevel network approach

Smith, Matthew ORCID: 0000-0002-3430-2176, Gorgoni, Sara and Cronin, Bruce ORCID: 0000-0002-3776-8924 (2018) The international fragmentation of production: a multilevel network approach. Networks of International Trade and Investment: Understanding globalisation through the lens of network analysis. Series in Economics . Vernon Press, Wilmington, DE, USA. ISBN 978-1622730667

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Twenty-first century production is fragmented into a number of stages, geographically spread internationally, which has led to a rise in the level of international trade in intermediate goods and intra-firm trade (Helg and Tajoli, 2005; UNCTAD, 2013). Fragmentation is due to outsourcing (Jones and Kierzkowski, 2005), as well as to the development of what Hanson et al. (2005) call “vertical production networks”, which describes the trade between a parent company and affiliates located abroad.

Traditional approaches used to investigate international trade and FDI, such as gravity models, generally fail to recognise the interdependencies which characterise trade and investment patterns. These models assume that firm decisions to export, import and invest in a nation are made in isolation of other trading and investment relationships. This is a strong assumption, and in a world characterised by interdependent production strategies, a different modelling approach is called for. Yet attempts to address this via network analyses of international trade (Cingolani et al., 2017) or corporate ownership (Kogut, 2012; Altomonte and Rungi, 2015) consider these two phenomena in isolation, disregarding the fact that country-level patterns of trade are a result of firm-level activity.

This chapter aims to fill this gap by presenting a strategy for combining firm and country-level data to overcome the abstract separation between the micro and the macro level. We examine the challenges of building a multilevel relational dataset using firm ownership data from Orbis and country-level international trade data from UN Comtrade. We then propose a multilevel network model that could be used with such data to investigate the micro determinants of ties observed at the macro-level. We consider potential challenges and propose solutions to such a modelling approach.

Item Type: Book Section
Additional Information: Chapter 8.
Uncontrolled Keywords: International Trade; Industry level; International production; network analysis; multilevel models
Subjects: H Social Sciences > HA Statistics
H Social Sciences > HD Industries. Land use. Labor
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Networks and Urban Systems Centre (NUSC) > Centre for Business Network Analysis (CBNA)
Last Modified: 26 Aug 2020 21:21

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