Claudia Steinwander, Massachusetts Institute of Technology, Sloan
Presenter: Claudia Steinwander
Paper [paper not yet available]: Drivers of Fragmented Production Chains: Evidence from the 19th Century
Abstract: This paper studies how communication technology improvements affect the fragmentation of production across international borders. We examine bilateral imports from Britain to all countries in the world for different product categories along the value chain in the 19th century cotton textile industry. The ruggedness of the submarine sea-floor provides quasi-random variation in the year in which a country gets connected to the global telegraph network. We show that there were substantial differences in the codifiability of product specifications along the value chain; that is, the extent to which attributes of a product could be specified in words (and thus be sent by telegram) as opposed to inspecting a sample of the product. In particular, product categories more downstream were less codifiable. We find that communication time improvements led to larger increases of imports for more upstream products, thereby increasing domestic manufacturing and increasing fragmentation.
The International Economics Seminar series is presented jointly with the Walsh School of Foreign Service and the Economics Department of Georgetown University.