This work analyses the relationship between international fragmentation of production and productivity growth. To identify the impact of fragmentation on productivity growth,we employ the methodology proposed in a different context by Rajan and Zingales (1996). In particular we interact the length and the width of sectoral production chains with a measure of countries' involvement in international fragmentation of production. We find evidence indicating that off-shoring increases labour productivity and total factor productivity in the externalising country.