Question

What is splitting up the value chain?

Short answer

It refers to the process of distributing the different stages of producing a good across different countries.

Step-by-step solution

Step 1. Background

Intra-industry trade refers to the trade of similar types of products between different countries. A significant portion of international trade is composed of trade between advanced high-income countries. who trade similar products.

Step 2. Explanation

In intra-industry trade, different countries specialize in different stages of producing the same good or service, To earn benefits from this higher degree of specialization, different stages of production are spread across different countries that specialize in that particular stage. Value chain refers to the different stages of production. Thus, splitting up the value chain is splitting this process across different nations.

For instance, in producing a phone, the designing process might take place in the US, different components can be constructed in South Korea, and these parts can be assembled in China.