Integration of Trade and Disintegration of Production in the Global Economy

Abstract

The last few decades have seen a spectacular integration of the global economy through trade. The rising integration of world markets has brought with it a disintegration of the production process, however, in which manufacturing or services activities done abroad are combined with those performed at home. The author compares several different measures of foreign outsourcing and argues that they have all increased since the 1970s. He also considers the implications of globalization for employment and wages of low-skilled workers and for trade and regulatory policy, such as labor standards.