International Fragmentation of Production

The Impact of Outsourcing on the Japanese Economy

Nobuaki Yamashita, School of Economics, Finance and Marketing, RMIT University, Australia

Using state-of-the-art econometric tools, this book examines the implications of international fragmentation of production for the performance of the Japanese manufacturing industry.

‘Nobuaki Yamashita’s book on international fragmentation of production combines theoretical analysis of outsourcing with painstaking empirical work. It is a welcome addition to one of the most rapidly advancing areas of international economics. It is likely to become a standard reference.’
– Henryk Kierzkowski, Graduate Institute of International Studies, Geneva, Switzerland

‘Japanese firms are major players in East Asian production supply chains, by outsourcing labour-intensive parts of the production process to nearby low-wage economies (production fragmentation). This excellent empirical study first uses new databases to contrast fragmentation trade pattern and labour market adjustment between Japanese and US firms. It finds that outsourcing leads to increases in the skill of Japanese manufacturing workers and, more importantly, that it did not hurt overall Japanese employment and possibly even helped. This is an important contribution to our understanding of East Asian regional production networks and Japan’s trade patterns.’
– Hugh Patrick, Columbia Business School, US