Yunjong Wang: This paper is insightful and provides important messages to trade economists and trade policymakers. Because this paper is semantic, my comments will also be rather non-technical. I have five points to discuss.

First, the concept of unbundling is relevant in understanding the determinants of trade and foreign direct investment. Richard Baldwin identified globalization as two kinds of unbundling. In the first two industrial revolutions, we observed two things: mass industrial production and transportation revolution. Put simply, the first unbundling enabled the geographical separation of the production from consumption. The mass production of standardized products could open global trade.

The second unbundling started in the 1970s when international transport costs dramatically diminished thanks to the introduction of containerized shipping and reduced communication costs. The companies started to physically redefine the role of headquarters and manufacturing facilities. The difference between the first and second unbundling rests on the organizational structural...

You do not currently have access to this content.