“The share of components in trade for East Asia is much higher than for all other regions in the world. In 2005/06, components accounted for over 35.0% of total manufacturing trade in developing East Asia, compared with the world average of 22.2%.” (Athukorala and Menon, 2010)

A. Identify facts which have contributed to the increasing share of components trade in developing East Asia. Were International Production Networks (IPNs) responsible for helping East and South East Asian economies develop? Are IPNs still relevant nowadays with the increasing labour costs in these regions? Address these questions with the use of valid real-life examples in your answer. (5 marks)

B. Examining the supply chain of iPhone to explain: Why are Apple’s products ‘Designed by Apple in California’ but ‘Assembled in China’? Why not build an iPhone entirely in the USA? (5 marks)

Sample Solution