Fragmentation of International Production and Business Cycle Synchronization: New Evidence pre and during Global Financial Crises

Understanding the link between fragmentation of international production (FIP) and business cycle synchronization (BCS) is crucial because it affects world economic stability hence hampers sustainability in trade, production, supply chain. Following that, this paper investigates effects an on amongst 38 countries (29 OECD nine non-OECD countries) for two different periods; pre-crisis (2003–2007) during crisis period (2008–2012). This study uses a dynamic panel system GMM estimation analyzing effect FIP BSC by controlling other explanatory variables, namely, trade linkages financial openness. Unlike many previous results, main findings reveal that positively significantly BCS period. However, shows insignificant normal In words, would amplify output downfall Trade have negative significant relationship with both periods, whereas openness has The suggests selective measures to be undertaken implementing reduce impact BCS. Increasing activities, hand, beneficial as they