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2021 | OriginalPaper | Chapter

7. Geography of Supply Chain 4.0 and Trade Policy

Author : Ayçıl Yücer

Published in: The Impact of Artificial Intelligence on Governance, Economics and Finance, Volume I

Publisher: Springer Nature Singapore

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Abstract

New trade patterns emerge with the changing organization and geography of supply chains under Industry 4.0. An eventual shift from Global Value Chains—GVCs is an actual concern for policy makers. This study designates the technical and managerial innovations that are shaping the new supply chain (Supply Chain 4.0) and identifies the forces of geographic agglomeration and dispersion. We feature two leading characteristics of Supply Chain 4.0: a huge amount of data flows and a customer-oriented production. Both of these two imply that the location choices are driven by data-related costs. Producer chooses between to locate closer to “data tower” to profit the scale economies in data analytics or instead, approach to customer. Finally, the form of the conventional bell-curve of Puga (1999) resulting from the trade-off between scale economies of production and transport costs change the form by putting from now on the Win-Win trade between North and South on a knife-edge equilibrium conditional on data frictions. Our research emphasizes that new trade policy takes the form of “data policy” and a joint and mutually benefiting international policy approach is essential for a sustainable trade. In this research, we basically made use of the literature to drive theoretical insights for future work on the geography of Supply Chain 4.0. However, since the limits of Industry 4.0 are not yet clear-cut, we used resources of very different nature (academic, reports, case studies, etc.) and from different disciplines (engineering, managerial sciences, economics).

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previous chapter The Impact on Digitalization on Financial Sector Performance
next chapter New Technologies and Economic Policies in the Global System
Footnotes
1
The third wave of industrialization - started with the advances in information technologies and electronics in early 70s-made possible to encode the physical world data into digital and to manage the manufacturing systems from digital platforms. Third industrialization recalls frequently to “intelligent” manufacturing (Kusiak 2018).
 
2
These nine technologies are as follows: Advanced robots, Additive manufacturing, Augmented reality, Simulation, Horizontal and vertical system integration, The Industrial Internet of Things, Cloud computing, Cybersecurity, Big data and analytics.
 
3
The term Supply Chain 4.0 is used for an integrated supply chain ecosystem, in which information flows in all directions, enabling the adjustment in real time throughout the supply chain. (PWC 2016).
 
4
Poetz and Schreier (2012) organizes a challenge for innovative ideas among a firm’s professionals and users. They are then judged by senior executives of the firm on the basis of novelty, customer benefit, and feasibility. The user-generated ideas scored significantly higher on novelty and customer benefit.
 
5
For example, we see that consumers may sell their self-produced products on Etsy platform. On the other hand, Facebook makes profit from the users’ shared information.
 
6
The manufacturing industry is used to work since decades with service and contract models, where the production by a third party takes place at different facilities (e.g. Foxconn). However, this is a sharing model for technology and know-how (Kusiak 2018).
 
7
The definitions, methodology and scope of e-commerce statistics need to be harmonized across countries for their comparability (UNCTAD 2017).
 
8
American Time Survey Data from BLS show that the number of hours spent for shopping by each American declined from 4.9 per week in 2005 to 4.4 in 2012, recovering slightly to 4.5 in 2016 (Ferrantino and Koten 2019).
 
10
As noted by Bughin et al. (2015), “the same interoperability that creates operational efficiency and effectiveness also exposes more of a company’s units to cyber-risks”. However, cyber-risks are not a direct consequence of geographic dispersion.
 
11
Risk of becoming “Data-colonies” for developing countries is first mentioned by Yuval Noah Harari during his speech in World Economic Forum Annual Meeting 2020 in Davos.
 
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Metadata
Title
Geography of Supply Chain 4.0 and Trade Policy
Author
Ayçıl Yücer
Copyright Year
2021
Publisher
Springer Nature Singapore
Book
The Impact of Artificial Intelligence on Governance, Economics and Finance, Volume I

Print ISBN: 978-981-336-810-1

Electronic ISBN: 978-981-336-811-8

Copyright Year: 2021

DOI
https://doi.org/10.1007/978-981-33-6811-8_7