Such global supply chains even exist for some products that
appear to have few “components,” such as fish. For example, a
Canadian firm may hire a Chilean trawler to fish in the Indian
Ocean, land its catch in Malaysia where it is frozen, and then
send it to China for further processing before it is finally sold to
Japanese wholesalers.
There are three implications for international trade in the
presence of integrated global supply chains. First, we should
not view countries as having comparative advantages in entire
products but rather in the specific productive activities that
take place along the global supply chain. China may not have a
comparative advantage in “producing” consumer electronics
but may have one in assembling them. Canada may not have a
comparative advantage in “producing” jet aircraft but may have
one in designing them.
Second, these comparative advantages may not be long-lasting
because they are sensitive to changes in the economic
environment and in technology. For example, significant
changes in national corporate tax rates, exchange rates, and
wages for factory workers will generally change the optimal
location for the production of a product’s various components.
Also, newly developed technologies for producing existing
products and creating new ones can alter the patterns of
comparative advantage significantly and quickly.