314 research outputs found
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China and the international fragmentation of automotive: a network analysis
Purpose
The paper addresses the question of to what extent has the rise of new supplying countries changed the structure of the international organisation of auto-production, by looking particularly at the role of China.
Rationale
Over the last decade, the international organization of automotive production has undergone major changes, with firms moving across borders with the aim to find more efficient organizational forms to serve final markets and with production processes split into different phases carried out in different countries. Geographic fragmentation of production (outsourcing and delocalization) has also seen emerging economiesâ (e.g. China, India, Brazil, etc.) increased participation to international division of labor. Fragmentation results in cross border trade flows of parts and components (ânetwork tradeâ or âtriangular tradeâ), and this is why it has been claimed that trade data is a good proxy for production data, thus revealing who does what in the international division of labour.
Design/Methodology/Approach
We apply network analysis to trade data. Following the empirical literature on production fragmentation, pioneered by Yeats (2001) and pursued in a number of recent studies we use bilateral trade statistics on components trade from the UN trade data reporting system (UNComtrade database). We select disaggregated trade data (at 5 digits level, representing detailed product categories) for each of the components used in production, using the Standard International Trade Classification (SITC, Rev. 3). Network analysis is applied to highly disaggregated international (components) trade data for the 1998 and the 2008. We use network visualizations tools to immediately grasp the changes occurred in the components trade networks over time. In addition, we calculate some network measures (e.g. reciprocity, centralization, out-degree strength and centrality, core-periphery and regionalisation) to describe and contrast the characteristics of the trade networks. Finally, we analyse the position and role of China by performing brokerage analysis and analysis of structural equivalence (Wassermann and Faust, 1994). All this is done using UCINET (Borgatti & al., 2002).
Findings
Our analysis has shown that China and a number of other emerging countries have not simply increased their weight as suppliers to the worldâs leading auto manufacturers, but have caused a switch in the international division of labour in the sector. In fact, the worldâs leading producers now act as the core of a more hierarchical production structure than a decade ago, that is they source from a number of individual suppliers â mainly within their regions â but these are disconnected from each other. Among the two contrasting tendencies towards globalisation or regionalisation of production, the latter seems to be still dominating in the auto industry. This suggests that the rise of China as major producer, given the possibility of low production costs and economies of scale, has not overcome the importance of transportation and diversification costs to final markets.
Originality/value
From a theoretical perspective, this paper contributes to the extant literature by disentangling the globalisation vs. regionalisation debate. From a methodological perspective the paper shows that the use of network analysis allows overcoming some limitations of traditional analytical techniques. Also, it improves on previous studies that apply network analysis to trade data by using highly disaggregated, directed and valued data
The effect of globalisation on industrial districts in Italy: evidence from the footwear sector
One of the most pervasive and disruptive effects of globalisation is the fragmentation of production processes across countries. This phenomenon is the result of delocalisation strategies pursued by firms in industrialised countries to counter increasing competitive pressures from low labour-cost producers in emerging economies. Many Italian industrial districts are deeply interested by this phenomenon. This paper will be focussed on footwear industrial districts. In the Italian footwear sector the increasing globalisation of production is imposing major changes on the organisation of production: · on the one hand, evidence at a national level shows that increasing international competition is spurring a massive fragmentation of production processes through delocalisation of labour-intensive activities abroad (towards Eastern European countries, mainly Romania); · on the other hand, evidence from a previous study of one of the author on one of the most important footwear clusters ? Riviera del Brenta ? suggests that the overwhelming presence of fashion firms and increasing concentration in distribution is limiting producers? control on some crucial activities, i.e. design, branding, marketing, distribution (Rabellotti R., 2001, ?The effect of globalisation on industrial districts in Italy: the case of Brenta?, IDS Working Paper 144, Institute of Development Studies, Brighton). Overall, these trends are reducing the range of activities carried out within the districts. Consequently, as firms in industrial districts enter international production networks, they are altering their traditional sources of competitiveness, which has traditionally come from intra-cluster relationships. This paper is concerned with the effect of globalisation of production on footwear industrial districts in Italy. The aim is to investigate the changing role of footwear districts within international production networks. The following questions will be tackled: which is the pattern of specialisation of footwear districts in Italy? Is there any common trend towards a reduction of activities carried out within the districts? Or, instead, are different patterns emerging for districts according to their segment of market and according to the value chains they belong to? The paper will explore these issues by analysing the pattern of fragmentation of production in the footwear sector at a regional and ?provincia? level, using data on outward processing trade (OPT) collected by Associazione Nazionale Calzaturifici Italiani (ANCI). This will allow to understand delocalisation strategies by location and to answer the question of whether different trends are emerging at a regional level. By matching this information with the geographical distribution of footwear districts in Italy, it should be possible to throw some light on the pattern of specialisation of different districts. As regards the other trend which might impact on the pattern of specialisation of footwear districts ? such as the emergence of big fashion firms in the luxury segment of the market? and which does not show up in the data, primary source information will be collected through surveys to producers in different footwear clusters, to complement the analysis above.
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The changing geography of world auto production: exploring the linkages between the trade and the FDI
Over the last decade, the international organization of auto production has undergone major changes, with firms moving across borders with the aim to find more efficient organizational forms to serve final markets. Trying to keep up with a rapid shift in the geographic composition of global demand â decreasing in industrialized countries while increasing in emerging economies â all of the worldâs leading producers have increased their foreign activities, either in the form of new production locations through greenfield FDI or through M&A with other firms.
Although the literature on the trade impact of FDI is widespread and has suggested that the latter may either be a complement or a substitute for trade, the automotive sector â one of the more dynamic sectors in terms of overseas expansion of leading producers â has so far not been investigated empirically.
This paper builds on previous research by the authors on the international reorganization of auto production applying SNA to trade flows (Amighini and Gorgoni, 2011, under review), showing that the emergence of new countries acting as parts suppliers has not only changed the geography of suppliers, but has also been accompanied by a change in the structure of production, as the worldâs leading producers now act as the core of a more hierarchical international division of labour than a decade ago. Based on firm-level data on greenfield FDI from fDIMarkets.com and M&A from various sources (at firm, sector and national levels), this paper aims to explore using multiple regression through the Quadratic Assignment Procedure (QAP) how the foreign expansion of auto firms (i.e. the FDI and M&A networks) has been an important determinant of the international trade network of auto parts and components
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As the Covid-19 pandemic strikes hard, protests in Hong Kong appear to have abated. Distant seem the days when yellow umbrellas and balaclavas saturated global media. And yet, just like at the start of what has now come to be known as the 2019 âglobal protest waveâ, Hong Kong remains at the frontline of political contestation worldwide. The protests against the 2019 Hong Kong anti-extradition law unearthed one of the main points of contention between Hong Kong and mainland China. Through the protests, Chinaâs increasingly assertive stance has found a counterweight, revealing how important the city is to Beijing. Chinaâs actions towards Hong Kong might serve as a litmus test for Beijingâs ability to mediate and pacify its neighbourhood. Meanwhile, the Covid-19 pandemic risks further heightening tensions between the Hong Kong and the mainland. What makes Hong Kong so special? To what extent have the protests exacerbated or eased over time? How will the cityâs role in mainland Chinaâs outward-looking plans change, if the protests continue
China After Covid-19
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China's Outward FDI: An Industry-level Analysis of Host Country Determinants
We provide an empirical analysis of host country determinants of Chinese outward FDI for the period 2003 to 2008, using data disaggregated by country and industry. We want to assess the relevance of market-seeking, resource-seeking and strategic asset seeking motivations suggested by the theory on FDI determinants. Our results show that only FDI in manufacturing is attracted by market seeking motivations. As expected, resource seeking is an important motivation for Chinese FDI in resource related sectors, which usually refers to countries with political fragile environments. Strategic asset seeking motivations are relevant for both manufacturing and services.China, foreign direct investment, internationalization, trade-FDI nexus
The Future of Xi's china
At the upcoming 20th Party Congress, which opens Sunday in China, Xi Jinping is expected to be confirmed as the countryâs Secretary General for an unprecedented third term. At a time of international instability caused by the Covid pandemic and the war in Ukraine, as well as rising competition between international superpowers, the Chinese leadership is called to increase the countryâs international standing, while ensuring economic growth at the domestic level. However, achieving these goals will not be without challenges.
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Officially announced by Xi Jinping in 2013, the Belt and Road Initiative (BRI) has since become the centrepiece of China\u2019s economic diplomacy. It is a commitment to ease bottlenecks to Eurasian trade by improving and building networks of connectivity acrossCentral and Western Asia, where the BRI aims to act as a bond for the projects of regional cooperation and integration already in progress in Southern Asia.But it also reaches out to the Middle East as well as East and North Africa, a truly strategic area where the Belt joins the Road. Europe, the end-point of the New Silk Roads, both by land and by sea, is the ultimate geographic destination and political partner in the BRI.This report provides an in-depth analysis of the BRI, its logic, rationale and implications for international economic and political relations
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