Spiders and Snakes: Offshoring and Agglomeration in the Global Economy

Anthony Venables and Richard Baldwin

No 8163, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Global production sharing is determined by international cost differences and frictions related to the costs of unbundling stages spatially. The interaction between these forces depends on engineering details of the production process with two extremes being ?snakes? and ?spiders?. Snakes are processes whose sequencing is dictated by engineering; spiders involve the assembly of parts in no particular order. This paper studies spatial unbundling as frictions fall, showing that outcomes are very different for snakes and spiders, even if they share some features. Both snakes and spiders have in common a property that lower frictions produce discontinuous location changes and ?overshooting?. Parts may move against their comparative costs because of proximity benefits, and further reductions in frictions lead these parts to be ?reshored?. Predictions for trade volumes and the number of fragmented stages are quite different in the two cases. For spiders, a part crosses borders at most twice; the value of trade increases monotonically as frictions fall, except when the assembler relocates and the direction of parts trade is reversed. For snakes the volume of trade and number of endogenously determined stages is bounded only by the fragmentation of the underlying engineering process, and lower frictions monotonically increase trade volumes.

Keywords: Agglomeration; Fragmentation; Offshoring; Parts and components; Assembly; Vertical linkages (search for similar items in EconPapers)
JEL-codes: F1 F23 R3 (search for similar items in EconPapers)
Date: 2010-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://cepr.org/publications/DP8163 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Spiders and snakes: Offshoring and agglomeration in the global economy (2013)
Working Paper: Spiders and snakes: offshoring and agglomeration in the global economy (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:8163

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP8163

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().