How fragmented is the world economy: Evidences from the EORA database

Abstract

Fragmentation of vertically integrated production processes (known also as vertical specialization) implies that production blocks are located in different countries and geographical areas across the world countries. This study using a modified originally measure proposed by Hummels et al. (2001), has analysed the degree of the production fragmentation of the world economy between the 1995 and 2015. Our main data source has been the EORA Database, which covers 189 countries with a classification for 26 economic sectors. Empirical results highlights a growth of foreign intermediate goods content of production in most of all economies particularly concentrates in the African continent and Eastern Europe