The slicing of a production process into vertically separated stages that are carried out in different countries otherwise known as Global production sharing—has redefined the dynamics of the world trade over the past few decades. Developing countries aiming at industrializing but ignoring global production sharing or outsourcing system and its related benefits, risk not only failing their policy goals but also being displaced out of the global trading system. Developing risk losing out skills upgrading associated with international trade in form of global production sharing (Suervey report by Gordon H. Hanson)
According to the study by the Asian Development Bank (Chandra Athukorala and Jayant Menon, 2010) world trade in parts and components increased from about 18.9% to 22.3% of total exports between 1992/93 and 2005/06. Most of this growth reuslting from global production sharing originated from East Asia and as result the share of the subcontinent in total world exports increased from 27% to 39% over the same period. Click for more information on global production sharing and lessons to developing countries.
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