Trade Negotiations

4 April 2015
This paper critically analyzes the article, “Integration of Trade and Disintegration of Production in the Global Economy” by Feensrta, R.C from the Journal of Economic Perspectives.

The following paper discusses and analyzes Feenstra’s article about globalization and particularly how manufacturing operations are becoming global. The article describes how organizations are increasingly able to move their production processes overseas, with the author describing this as causing a breakdown in the vertically integrated mode of production. This paper discusses why the author argues that foreign outsourcing has increased since the 1970s and looks at two implications of the changes: the impact on wages and the implications for labor policy.
The author distinguishes between final products and intermediate products, arguing that this point is often neglected, which I think is true. Manufacturing in other nations does not always mean moving complete operations to that nation, it means using certain parts from that nation that become intermediate in the final product. This intermediate product is sold back to the international supplier for a certain cost, which does not recognize the full cost of the final item. It is with the final item that the value is added. Also recognized, is the importance between recognizing that services are also provided internationally, rather than just products.

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