chapter  1
29 Pages

Intra-Industry Production as a Form of International Economic Involvement: An Exploratory Analysis

WithJohn H. Dunning, George Norman

This chapter examines some of the determinants of intra-industry international production within the broader context of a unified paradigm of international economic involvement. It presents a typology of inter-country economic transactions. Intra-industry transactions incorporate those in identical or closely similar goods, and are based on the extent to which different locations enable the gains of plant concentration and specialisation, and those arising from the common ownership of multiple activities, to be exploited. The degree of fineness of the classification obviously affects the extent of intra-industry trade; the broader the concept of an industry, the higher the intra-industry trade ratio is likely to be. Direct foreign investment (DFI) as a form of international economic involvement may sometimes substitute for trade in goods. Intra-industry DFI or foreign-production is a form of international economic involvement between countries which has many of the characteristics of both inter-industry production and intra-industry trade.