Showing posts with the label production chain

Free Trade Agreements can Foster Economic Hubs

Free trade agreements are a common economic method of increasing trade. Free trade agreements work best where lower value imports are used to create higher value exports. Global hubs  often work with regional hubs in an international supply chain that continues to develop products for exportation to world markets. Effective economic hubs use intellectual capital to create value that cannot be easily copied by other countries. According to Chong and Hur (2008) each hub has access through trade agreements to the spokes but the spokes only have access to the hub. This means that the hub can sell more products and services than the spokes can themselves. This advantage gives them preferred trading and profitability standards. It also creates a value chain with the highest hub realizing the most benefits. Because hubs are central locations, they also can have an advantage in investments (Wonnacott, 1996). Those who seek to maximize their investment opportunities will invest their