Fragmentation agglomeration matter: Japanese multinationals in Latin America and East Asia

This paper analyzes micro data of Japanese multinational enterprises (MNEs) to investigate differences between Latin America and East Asia from various viewpoints of their corporate activities. One of the crucial factors to make a sharp contrast is the development of international production/distribution networks utilizing the benefit of fragmentation and agglomeration. Japanese firms have played an important role in developing international production/distribution networks in East Asia while they have not yet either constructed a critical mass of industrial clusters or formulated efficient vertical chains of production in Latin America, where proper international commercial policies are the key for success.