Relationship-based governance a new trend

The shift toward relationship-based governance within the East Asian production network is becoming prominent. This trend is driven by several key factors.

The first factor is a decrease in product modularity due to technological advancements. As technology progresses, products become less modular, increasing the need for close collaboration among supply chain partners.

The second factor is a rise in demand for high value-added products. In fact, consumer preferences are becoming increasingly inclined toward high value-added products.

And the third factor is enhanced capabilities of developing countries' enterprises, because they are investing more in research and development, so as to boost productivity, thereby increasing their production capacity.

The case of Apple and its Chinese suppliers exemplifies this shift from a captive model to a relationship-based model. By investing heavily in its supply chain in China, Apple has fostered close ties with its suppliers to make high value-added smartphones. This includes customizing components, designing production processes and employing engineers to work closely with suppliers.

Over time, both Apple and its suppliers have increased their reliance on each other's capabilities, leading to close coordination throughout the research, prototyping and production processes.

Ding Ke, director and chief researcher at the Asia Economic Research Institute of the Japan External Trade Organization

Measures needed to deal with low birth rates

Japan is currently facing issues such as declining birth rates and excessive urbanization. These phenomena should be understood from the perspective of spatial economics, and policies, such as supporting the development of small and medium-sized enterprises, should be taken to increase the birth rate.

These policies aim to enhance the birth rate by creating high-quality employment opportunities and encouraging young people to stay in rural areas. Additionally, the importance of regional industrial policies in addressing the issue of low birth rates should never be underestimated.

Nobuaki Hamaguchi, an economist at the Kobe University.

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