New publications: retailing and cloud computing

I am very happy to share that the ITC recently published a couple of papers that occupied a lot of my professional energies over the last couple of years: one on nontariff measures in the global retailing industry, and another on cross-border cloud computing. I would like to publicly extend a big thanks to my co-authors (Danielle Vu on the former, Renee Berry on the latter) and our many colleagues who supported these efforts.

Comments on these products are welcomed and appreciated.

Local vs. Universal: 7-Eleven in Indonesia

7-Eleven store in Singapore. Source: Calvin Teo, Wikimedia Commons

I'm always interested to see how retail concepts get adapted to new markets around the world. It is particularly fascinating to me to note which traits prove universal and which are adapted to local tastes and market characteristics.

The New York Times recently ran a story about 7-Eleven stores in Indonesia that illustrated this phenomenon nicely. The merchandise is a mix of what one might call "global 7-Eleven cuisine" (e.g., Slurpees) and local favorites (fried rice). Equally notable are the extent of adaptations to operating practices. While the Indonesian 7-Elevens carry convenience items like 7-Elevens elsewhere, so much that goes on in the stores (seating areas, live music, wi-fi) is geared toward getting people to stick around in them. That's a stark contrast with the 7-Eleven down the hill from my house, which is plastered with signs that warn against loitering.

To me, the most interesting lesson here was that the chain's success depended not only on a willingness to be flexible about which operational aspects to adapt (or not) to local circumstances, but also on connecting with a gatekeeper to the market (in this case, a savvy franchisee) who was able to identify an unfilled, potentially lucrative market niche. From the way the story tells it, it was 7-11's good fortune that the franchisee persisted in pursuing a relationship with the company. A bit of good luck like this never hurts, either.

Give a Hug, Get a Coke

My favorite bit of news from the retail industry today: in Singapore, Coca-Cola has introduced a vending machine that dispenses a soda if you hug it. As this article discusses, it is a rather ingenious marketing campaign: it draws young people (it is located at a university) into a multi-sensory engagement with the product, and taps into their increasingly positive attitudes toward public displays of affection.

Score a few creativity points for Coke.

Profits, Wages, and Jobs in a World of Globalized Production - the Case of the iPod

Source: Matthieu Riegler, Wikimedia Commons

Like many, I have been reflecting on the decline in U.S. manufacturing employment in recent decades, and grappling with whether, why, and how it matters for our country. One would be hard-pressed to find a more insightful researcher on this topic than Jason Dedrick of Syracuse University, who visited us at the USITC this week. I will post a link to his very interesting presentation once it appears on the USITC's website. In the meantime, here is a link to  "Innovation and Job Creation in a Global Economy: the Case of Apple's iPod", a paper that he, Greg Linden of UC-Berkeley, and Kenneth Kraemer of UC-Irvine published in the Journal of International Commerce and Economics in 2011. Also interesting is "Who Profits from Innovation in Global Value Chains? A Study of the iPod and notebook PCs," a conference paper by the same authors from 2008.

The most compelling lesson I took away from Dr. Dedrick's and his colleagues' work was that the U.S. has undoubtedly lost a lot of manufacturing production jobs to other countries, but much of the design work has remained onshore. As a result, the United States appears to be keeping substantial shares of the profits, jobs, and wages generated from products manufactured via global production chains, such as the iPod. U.S. employment in engineering and high-skilled professional jobs associated with such production have proven resilient. Bilateral trade statistics, such as those showing a large deficit in U.S.-China goods trade, risk painting a misleading picture of the distribution of benefits from the iPod and other such "Made in China" products.

However, the negative impacts of the globalization of production on (former) production workers in the United States appear undeniable. Even if the shift of those jobs out of the United States ultimately produces net benefits for the U.S. economy--which is a strong possibility--those so displaced are left all too often with few ready options for employment, at least at the wage levels they enjoyed previously.

Here's the big takeaway for me: policymakers seeking an appropriate response to the decline in U.S. manufacturing employment should focus less on trade policy and far more intently on education and workforce development. We need a far more cohesive and aggressive national strategy for upgrading the skills of our present workers and educating our students for the high-skilled science, engineering, and technology jobs that are critical to maintaining the United States' edge in innovation--and that are far more likely than lower-skilled production jobs to remain on-shore while continuing to offer attractive wages.

Happy Belated Birthday to Our Household's Youngest Blogger

What would I do without my little assistant? March 2012