Sentences to ponder, on globalization’s 2nd unbundling

…as the Thai versus Malay auto sector experiences show, thinking about localisation policies without putting global value chains at the heart of the economic logic can lead to some very misguided policies.  Today’s nations might do better to look at Thailand starting from the late 1980s, rather than Korea and Taiwan.

That is from Richard Baldwin and the paper is here.  For background, Baldwin suggests that Malaysia failed to become a major auto producers because it tried to commandeer the entire supply chain, whereas Thailand was content to fit in with the broader Japanese supply chain.  I found this an excellent read, interesting throughout, though I wish Baldwin had spent more time discussing the rather limited nature of economic progress in Thailand, including relative to Malaysia.

The paper has the title “Trade and Industrialisation after Globalisation’s 2nd Unbundling: How Building and Joining a Supply Chain are Different and Why It Matters.”  It’s the first good paper I’ve read this year, but there are more to come.  It is also a good paper for Arnold Kling to comment on; Baldwin asks for instance how South Korea will deal with the international unbundling of the national supply chains the country has created and used to back its growth.