International Trade and Local Organization of Production - Two Elementary Propositions

Abstract:     
This paper argues that international trade should affect local organization of production in a systematic way. By using the standard Heckscher-Ohlin-Samuelson model we show that the export sector is more likely to demonstrate fragmentation, entrepreneurship and outsourcing compared to the import-competing sector in a typical labor abundant country. Liberal trade regime will promote entrepreneurship in general. This is the first elementary proposition. Local outsourcing also establishes a clear link between trade and productivity. This is the second elementary proposition.

Number of Pages in PDF File: 19

Keywords: Trade, outsourcing, entrepreneurship, productivity

JEL Classification: F11, D23, J54, O47

working papers series