This article appraises the conceptual foundations of the new international division of labor (NIDL) literature. According to NIDL, the observed shift of international production from developed to less developed nations can be explained by an international verticalfragmentation of production in which different phases of production are undertaken in different nations, often by the samefirm. The purpose of this review is to examine the conceptual issues surrounding this theory, to analyze NIDL's intellectual relationship to key economic theories, and to draw a conceptual critique.
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