Patents in the History of the Semiconductor Industry

Chips can be easily copied and semiconductor firms are not monopolies. Nevertheless, in the semiconductor industry patents protect Ricardian rents against free riding. Ricardian rents—rents wrought by a firm’s differential ability to produce more output or value per unit of input—remunerate the investments in R&D that semiconductor firms make in the expectation of profit. In addition, patents enlarge the set of business models, strategies, and contracts that firms can use to trade. Many practices that emerged over time—for example technical marketing, second sourcing, licensing, trade in intellectual property—and the observed evolution of horizontal and vertical specialization would not have been feasible without patents. Last, patents and Ricardian rents in the semiconductor industry conciliate protracted investments in R&D with exceptionally fast growth of multifactor productivity and falling prices over almost 70 years.

ЕКОНОМІЧНА РЕТРОСПЕКТИВА РОЗВИТКУ ТЕОРІЇ ВЕРТИКАЛЬНОЇ СПЕЦІАЛІЗАЦІЇ

We explore the development of vertical specialization theory which is trade in goods across multiple stages of production on the relationship between trade and business cycle synchronization across countries. We study various papers about international trade model in which explores the degree of vertical specialization varying with trade barriers. We examine how and why these vertical specialization models created by economists and compare differences of those models. Since VS one of the most important changes involves the increasing interconnectedness of production processes in a vertical trading chain that stretches across many countries, with each country specializing in particular stages of a good’s production sequence. The purpose of the article is to form a theoretical and methodological basis for an economic retrospective of the development of the theory of vertical specialization. The subject of the research is theoretical and methodological aspects of the economic retrospective of the development of the theory of vertical specialization. Methods used in the study: historical method, methods of verification of theoretical positions (morphological analysis of the content and relationship of categories, principles and laws, assessment of the correspondence of historical facts to theoretical hypotheses), methods of analysis and synthesis, induction and deduction, logical method (hypothetical and axiomatic approaches), comparison method. Research hypothesis. In the context of global challenges, it is necessary to change the nature of interaction, for which it is necessary to form a theoretical and methodological basis for an economic retrospective of the development of the theory of vertical specialization. Presentation of the main material. Vertical specialization occurs when a country uses imported intermediate parts to produce goods that it later exports. This definition reflects the idea that countries are consistently linked to each other to produce the final good. The fulfillment of the conditions is justified: the product must be produced in several successive stages, two or more countries must specialize in the production of some, but not all, stages, and at least one stage must cross the international border more than once. It is emphasized that vertical specialization occurs when a country uses imported intermediate parts to produce goods that it later exports. Originality and practical significance of the research. The study of the economic retrospective of the development of the theory of vertical specialization includes four interrelated blocks – the theoretical and exploratory basis of interaction, the substantive (paradigmatic and methodological), applied and managerial basis of the interaction of business entities, which will allow comprehensively cover possible aspects of interaction. Conclusions of the study. The article examines the theoretical and methodological basis of vertical trade also connects the growth of international trade with an increase in international production. The forces that have driven increased vertical trade – lowering trade barriers and improving transport and communication technologies – are likely to persist. Thus, we can conclude that the value of VS and vertical trade in world trade will grow from year to year.

Structural Change in Exports

Trade analysis on the basis of countries’ export baskets can be misleading when production is globally fragmented. The chapter argues for a switch to an analysis of the type of activities that are embodied in exports. The chapter discusses two steps towards this goal. It first discusses the transition in trade studies from product to vertical specialization. A country’s vertical specialization in trade is measured as the share of domestic value added in its gross exports. The chapter identifies three waves of vertical specialization in the world economy since 1970 and documents the servicification of manufacturing exports. Results from cross-country analysis show a robust association between specialization and productivity growth, but not between specialization and employment growth. Next, the chapter considers functional specialization in trade based on the measurement of distinct activities in exports such as fabrication, marketing and R&D, based on an occupational classification of workers. It documents how advanced economies continued to specialize in headquarter activities, while quickly moving out of fabrication activities. It also shows that there are many idiosyncratic determinants of a country’s specialization pattern beyond its general development level. The chapter ends with suggestions for further research, given that the measures of trade in value added and activities presented are still in a development phase.

Competitive Circular Economy Management. The Mitsubishi Corporation Case

In today’s scenario of ‘hyper competition’, global corporations face many other MNCs (more and more frequently based in the US, China, South Korea, Taiwan and Europe). In oversize economy, global companies move to adopt closed innovation policies. In particular, the circular economy suggests that sustainable outputs can be achieved without loss of revenue or extra costs for global manufacturers. The transformation from MNCs to global networks has led towards vertical specialization and highly diversified patterns of collaboration through inter-firm and intra-firm transactions coordinated by global corporations. As we can see from the experience of the greatest global corporations (e.g., Mitsubishi Corporation), the biggest global companies see the circular economy as a specific tool to compete, in the context of a network vision (competitive circular economy management).