Global infrastructure and production division by heterogeneous firms

International trade has grown rapidly along with the progress of globalization. Heterogeneous and multi-national firms have become very important players in international trade. The firms arrange for the allocation of production worldwide due to various conditions of factor endowment such as differences in labor productivity and wage rates between countries. The improvement of international infrastructures, such as harbors and airports, influences production conditions in each country, bringing about differences in the arrangement of production allocation among firms. This scenario eventually causes industrial relocation and capital flow from one country to another, and such behavior by firms will be accelerated within ASEAN, where the reduction of border barriers due to AEC enables the firms to benefit from the comparative advantage of every member country.