Citation

Discussion Paper Details

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Title: Globalization and the Evolution of the Supply Chain: Who Gains and Who Loses?

Author(s): Masahisa Fujita and Jacques-Fran�ois Thisse

Publication Date: December 2003

Keyword(s): agglomeration, communication costs, headquarters, information technologies, plants, relocation and supply chain

Programme Area(s): International Trade and Regional Economics

Abstract: This Paper focuses on two distinct facets of globalization: the decrease in the trade costs of goods and the decline of communication costs between headquarters and production facilities within firms. When the unskilled have about the same wage in the two regions, the decrease of these costs fosters the gradual agglomeration of plants in the core region accommodating the headquarters. By contrast, when the wage gap is significant, the process of integration eventually triggers the relocation of plants into the periphery. In particular, when falling communication costs drives the process of relocation, the welfare of all workers living in the core goes down whereas the welfare of those who reside in the periphery rises.

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Bibliographic Reference

Fujita, M and Thisse, J. 2003. 'Globalization and the Evolution of the Supply Chain: Who Gains and Who Loses?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4152