The factors responsible for the spatial reorganization of contemporary manufacturing are presented here and the predictive power of long-standing notions of comparative advantage revisited. While a growing number of commercial tasks and technologies are in principle mobile internationally, giving rise to the perception of evermore footloose manufacturing firms and greater job insecurity, there is much in the modern organization of manufacturing that is both viscid and involves location-specific competitive advantages. This calls for a more nuanced assessment of the impact of an open world trading system on the spatial division of labor and on living standards. [ABSTRACT FROM AUTHOR]

Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now-standard heterogeneous firm model posits measure-zero firms that compete under monopolistic competition and decide whether to export to foreign markets. However, much of international trade is dominated by a few 'global firms,' which participate in the international economy along multiple margins and account for substantial shares of aggregate trade. We develop a new theoretical framework that allows firms to have large market shares and decide simultaneously on the set of production locations, export markets, input sources, products to export, and inputs to import. Using US firm and trade transactions data, we provide strong evidence in support of this framework's main predictions of interdependencies and complementarities between these margins of firm international participation. Global firms participate more intensively along each margin, magnifying the impact of underlying differences in firm characteristics and increasing their shares of aggregate trade. (JEL D22, F14, F23, L60, R32) [ABSTRACT FROM AUTHOR]