The word fragmentation refers to a splitting up of a vertically integrated production process such that the separate fragments can be traded on markets. This paper is concerned with international fragmentation, generally allowing gains from a finer division of labor based on comparative...

Today’s global world is characterized not only by a high volume of international trade and foreign investment relative to national income, but also by a changed composition of that trade towards a greater fraction of trade in inputs and capital goods and outsourcing of production.. Emphasized...