Picture a global supply chain. The one that puts together the Amazon Kindle, for example: The flex circuit conductors are made in China, the wireless card is made in South Korea, and the tablet is assembled in Taiwan. The system works because each location specializes in something, whether it is relatively cheap labor, a cluster of machinery, or technical skills. But unlike a product made in a single factory, the Kindle’s components must cross borders.
The ease of crossing those borders – including through seaports or airports – is crucial to the production network. And, as it happens, fluidity is more important to trade in components than trade in final products. This makes sense, logically – it is easy to see how a whole holiday season’s worth of Kindles could be held up if the flex circuit conductors or wireless cards don’t get to Taiwan on time.