Shifting Towards a Consumer-Centered Economy and the Implications for International Trade

19 Pages Posted: 2 Jul 2018

See all articles by Matthias Helble

Matthias Helble

Asian Development Bank; ADBI; ADBI

Date Written: February 20, 2018

Abstract

Globalization has radically changed the way goods and services are produced. The impact of globalization on production has been driven mainly by two determinants: In a first phase, a quick fall in transportation costs between countries and in a second, more recent phase, a drastic lowering of international communications costs. We argue that we are currently witnessing the start of another epochal change. Advances in communication and information technology enable companies to have more and more knowledge about the individual consumer. Consequently, products and services can be marketed more specifically or can be customized according to the customer’s preference. We call this new era the consumer-centered economy. The consumer-centered economy is challenging our standard trade and development theories in which consumers are typically assumed to be identical. We predict that the success of countries and firms will depend on how well they are able to integrate consumer information into the process of value addition. Producing standardized goods and services will offer little perspectives for economic development, even when integrated into regional value chains.

Keywords: international trade, trade costs, production networks, consumer, customization

JEL Classification: F14

Suggested Citation

Helble, Matthias, Shifting Towards a Consumer-Centered Economy and the Implications for International Trade (February 20, 2018). ADBI Working Paper 812, February 2018, Available at SSRN: https://ssrn.com/abstract=3198576 or http://dx.doi.org/10.2139/ssrn.3198576

Matthias Helble (Contact Author)

Asian Development Bank ( email )

Philippines
006326831120 (Phone)

ADBI ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

ADBI ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

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