ABSTRACT
While fragmentation has attracted considerable interest in the recent literature (see, for example, Arndt, 1997; Deardorff, 1998, 2001; Jones and Kierzkowski, 2001), much of the literature to-date has discussed theoretical issues from the point of view of international trade theory using Ricardian and Heckscher-OhlinSamuelson (HOS) type models. For example, Jones and Kierzkowski (1990, 2001) discuss the importance of service links for the production of separate fragmented components. The production of separate components needs to be co-ordinated, using transportation and communication services, and reductions in costs for these services have facilitated fragmentation. Harris (1995, 2001) concentrates further on the importance of telecommunications for fragmentation, while Deardorff (1998, 2001) analyses the determination of world prices for fragmented components.
