Over the last few decades, two fundamental changes have transformed the face of global production and world trade. The first is the increasingly integrated nature of world markets, which can be explained to a large extent by trade liberalization, regional integration agreements (RIAs), agglomeration and location economies, falling transportation and transaction costs and rapid technological advances, especially in information and communication technologies. The second is the “disintegration” of the production process, in particular the increasing presence of intermediate goods in global trade, which essentially entails the fragmentation of the Fordist vertically-integrated model of production and allows for the strategic global dispersion of different value added activities in value chains or global production networks.

The analysis encompassing all activities needed to bring a product or service from conception and design, through the intermediary phases of production, marketing, to culminate in delivery to the end consumers has been termed variously as outsourcing, global value chains (Kaplinsky, 2000), global commodity chains (Gereffi and Korzeniewicz, 1994), the disintegration of production (Feenstra, 1998), value networks, vertical specialization (Hummels and others, 1998) global production sharing (Ng and Yeats, 1999; Yeats, 2001) and global supply chains (Baldwin, 2012).