Property Rights and the International Organization of Production

摘要

Recent years have witnessed a remarkable increase in the way firms organize production on a global scale. A variety of terms have been used to refer to this phenomenon: the "slicing of the value chain," "international outsourcing," "fragmentation of the production process," "vertical specialization," "global production sharing," and many more. In developing their global sourcing strategies, firms not only decide on where to locate the different stages of the value chain, but also on the extent of control they want to exert over these processes. The latter is the classical "make-or-buy" decision in industrial organization. Some firms, such as Intel Corporation, decide to keep the production of intermediate inputs within firm boundaries, thus engaging in foreign direct investment (FDI) and intrafirm trade when the integrated supplier is in a foreign country. Other firms, such as Nike, choose to contract with arm' s-length suppliers for the procurement of these inputs, and thus their activities are in general not recorded in FDI or intrafirm trade statistics.