Global Value Chain

Globalisation is non-trivial, especially for the computer and digital industry. Ordinary small businesses likely experienced the benefits and drawbacks of outsourcing to freelancers through the Internet. For example, decent graphic design can be obtained at very low cost due to intense competition the digital platform offers. On the other hand, Internet freelancers often lack depth of specialized expert agencies and can not accomplish cases like complex marketing integration.

However, the big players are oligopolies. Is there a reason why the computer and digital industry often forms global value chains?

Consider iPhones. Apple worked with TSMC to build its SoC, and TSMC worked with machine vendors around the world to complete semiconductor manufacturing process. The reason is simple. Technological specialization and expertise are scattered around the world that no nation can compete on its own for excellence. Krugman put the case of globalisation as a race between transportation and production technologies. It's deeper than that and concerns the geography of most prestigious technologies.

Global value chain exists because it's the cost effective way to accomplish technological excellence in a world where technological expertise is scattered. The existence provides valuable guidance for policy. Economic nationalism can not work very well if pushed too far.

The question is, of course, whether politicians will learn from reality or bend to the wishes of shallow populism.