Globalization of production: Insights from the hard disk drive industry

Rapid change in the geographical location of production raises important questions regarding the welfare, development potential, and competitive position of different countries and regions. This paper explores in detail the geography of economic activity in a specific industry, the hard disk drive (HDD) component of the computer industry. Firms in the HDD industry are breaking the production system into ever smaller distinct steps, and spreading the physical location of these steps around the world. Firms from the United States dominate the industry. Our findings suggest that globalization has enabled US firms to sustain their dominant position in the industry, preserve employment in the United States (and possibly expand it), and increase employment worldwide, most notably in Southeast Asia. (C) 2000 Elsevier Science Ltd. All rights reserved.