Recent decades have seen a fragmentation of production processes across borders, as firms find it increasingly profitable to organize production on a global scale. This fragmentation occurs across national borders as well as across firm boundaries; companies must decide not only the location of...

This paper studies how firms' offshoring decisions shape a country's domestic production networks. We develop a model in which heterogeneous firms source inputs from multiple industries located in different domestic regions and foreign countries. Input sourcing entails communication with...