Separating Doing from Learning – The Dynamics of Vertically Fragmented Trade

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• 研討會日期 : 2010-06-29
• 時間 : 14:30
• 主講人 : 萬又煊教授
• 地點 : C103
• 演講者簡介 : Henry Y. Wan, Jr. got his Ph.D. in Economics from M.I.T. in 1961. He is currently serving as Professor of Economics at Cornell University. His research interest is in development under globalization, the economics of East Asia, industrial policy, and welfare economics of international trade.
• 演講摘要 : t has been well understood that within multinational corporations, production of the same product may be carried on by plants at economies with different levels of skill and wage, the study of Ito (1999) documents the practice at Sony in its Southeast Asian branches in Singapore, Malaysia and Indonesia. The evolution of the intra-firm production allocation at Seagate, the lead firm of hard-disk drives (HDD) provides excellent information on this topic. Gourevitch et al, 1997; McKendrick, 2000. The 2009 reallocation of production within that firm, involving Singapore and Thailand, supplies further information. This rich information provides a prism to understand how learning-by-doing is carried out in an era of task-trading (Grossman and Rossi-Hansberg, 2006) and fragmented production (Arndt, et al, eds. 2001). In a globalized age, with high-wage economies serving as ‘transfer stations’ to debug the production process when a product is new, and a base for trouble-shooting, as the production of older products are shifted to production site with lower wage, but less production skill. This means, rather than concentrating learning and doing for a particular product in one economy at a time (as implied by the tradition of Arrow, 1962),a pair of tethered economies participate in the process: the high wage economy does more of the learning, and the low wage economy undertakes assisted learning. This study formally models the dynamic process in a framework of over-lapping generations for vintage outputs to show how trade fragmentation helps to maximization of the present value stream of profit for the multinational firm. Then, from the shake-out process in the HDD industry, one can infer that what is present value maximizing for a producer is also efficiency maximizing in the world economy, as the number of producers shrink from 200 to 62 to 5, and the cost for giga-byte of information storage drops from more than $200,000 in 1980 to $.07 in 2009. In short, as a proof for ‘the Alchian Thesis’ on profit-maximization firms, not all firms maximize profit, but all surviving firms do. The welfare implication of a ‘transfer-station’ economy remains to be explored. The threat of de-industrialization happening to Singapore is of course relevant to other NIEs as well. It is obvious, this is also a question of policy relevance. On the one hand, the relentless product cycle has its human cost; on the other hand, how to position oneself in a global economy to enjoy more of the benefit and less of the negative impact is an issue of industrial policy. Historically, this was the practice of Japan in the 1980s for semiconductors, before the resurgence of American electronics industry under the Sematech Project (Okada, 2006).