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Determinants of International Fragmentation of Production in European Union

The growth in world trade during the last decades was largely caused by increasing bilateral exchanges of parts and components as a consequence of international fragmentation of production. This paper reveals empirical evidence on parts and components trade as an indicator for international fragmentation of production in the European Union and determines its main explanatory factors. The results of a panel data analysis show that especially industry-specific factors as well as transportation and communication infrastructure are likewise important for shifting production to or sourcing components from foreign countries.

15. November 2011

Authors Götz Zeddies

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