Fragmentation and parts and components trade: Comparison between East Asia and Europe

This paper argues that fragmentation theory is well suited for explaining the mechanics of international production/distribution networks in East Asia, in contrast with the traditional horizontal product differentiation model fitted for intra-industry trade in core Europe. Using finely disaggregated international trade data, patterns of international trade in East Asia and Europe, particularly trade in machinery parts and components, are carefully examined, and the gravity equation approach is applied to check the validity of the theoretical framework.