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Globalization in an Age of CrisisMultilateral Economic Cooperation in the Twenty-First Century$
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Robert C. Feenstra and Alan M. Taylor

Print publication date: 2014

Print ISBN-13: 9780226030753

Published to Chicago Scholarship Online: September 2014

DOI: 10.7208/chicago/9780226030890.001.0001

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Trade and Industrialization after Globalization’s Second Unbundling: How Building and Joining a Supply Chain Are Different and Why It Matters

Trade and Industrialization after Globalization’s Second Unbundling: How Building and Joining a Supply Chain Are Different and Why It Matters

Chapter:
(p.165) 5 Trade and Industrialization after Globalization’s Second Unbundling: How Building and Joining a Supply Chain Are Different and Why It Matters
Source:
Globalization in an Age of Crisis
Author(s):

Richard Baldwin

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226030890.003.0006

Why has so-called high development theory still failed to show how poor countries can succeed and narrow the gap with the rich world. The paper argues that transformations in the workings of trade created by today's globalization require a new theory. The key is to note that in past eras, the globalization of trade only enabled a “first unbundling” via the separation of the locales of factory production and end consumption. But the last 20 years saw a completely new mechanism, the supply chain, where the different parts of the manufacturing process can be split up by locale. This “second unbundling” is as revolutionary as the first, if not more so. Creating disruptive niche opportunities, the supply chain allows many different value added slices to be produced in myriad locations as the factory itself is unbundled.

Keywords:   Development theory, Globalization, First unbundling, Second unbundling, Supply chains

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