Is There a Trend towards Global Value Chain Specialization? An Examination of Cross Border Sales of US Foreign Affiliates

Sjoerd Beugelsdijk, Torben Pedersen, Bent Petersen

    Research output: Working paperResearch

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    Abstract

    In this study we discuss and empirically test the assertion that over the last two decades multinational enterprises' (MNEs') configuration of value-adding activities has shifted from a sparse and simple (host-home) international division of labor among the foreign affiliates to a more specialized and 'advanced' global value chain configuration in which MNEs locate fine-sliced parts of the value chain at the most efficient locations. Using data on trade flows of U.S. affiliates in 56 host countries between 1983 and 2003 we find some indications of a trend in the direction of global value chain specialization. In particular among US affiliates in developing countries the proportion of host-host, intra-firm trade has increased significantly during the observed period of time. Conversely, the proportion of host-home and inter-firm trade has diminished. We interpret this as indicating both value chain disaggregation (vertical specialization) and MNEs' systematic exploitation of factor cost differentials across countries. We also find that the absolute levels of all types of trade flows have increased. Hence, it is the relative, and not the absolute, changes in the trade flow patterns of US affiliates that gives credibility to the global value chain assertion.
    Original languageEnglish
    Place of PublicationFrederiksberg
    PublisherCenter for Strategic Management and Globalization
    Number of pages49
    ISBN (Print)9788791815379
    Publication statusPublished - Jul 2008
    SeriesSMG Working Paper
    Number24/2008

    Keywords

    • FDI
    • US affiliate sales
    • Globalization
    • Value chain specialization

    Cite this

    Beugelsdijk, S., Pedersen, T., & Petersen, B. (2008). Is There a Trend towards Global Value Chain Specialization? An Examination of Cross Border Sales of US Foreign Affiliates. Center for Strategic Management and Globalization. SMG Working Paper, No. 24/2008