Most of Apple’s manufacturing is in China and most of its sales are outside the US. I think it’s a huge success of globalism, and the same can be said about a lot of the US tech industry.
This doesn’t seem like it implies any sort of disagreement and I don’t understand why you think it’s relevant additional information in this context. Maybe you’re treating vertical integration as a very different thing from import substitution, while from my perspective they are identical; I didn’t mean to say that the USA has done well by import substitution via Apple and Amazon, but that Apple and Amazon themselves, as statelike clients of the US-led global financial system, have done well through import substitution.
Yeah, I misunderstood how you used the phrase. But the new usage also seems iffy to me.
A firm can vertically integrate by buying other firms. This doesn’t seem analogous to import substitution.
A firm can vertically integrate to make a product that can’t be bought from elsewhere. I’d argue that’s what Apple and Amazon did. Can you really say they were doing the equivalent of protecting their market from imported cheap steel, like a country doing import substitution industrialization? Could they get software as good as iOS or AWS from elsewhere for cheaper? No they couldn’t, that’s why they built it. It’s not import substitution if there’s no “import” to substitute. And when good “import” is available, they’re happy to use it: Apple relies on Foxconn for manufacturing, and Amazon relies on lots and lots of sellers.
And most importantly, countries do import substitution to become less dependent on the market. But for a firm, the whole point is to sell stuff on the market. Apple and Amazon are successful because they sell lots of stuff. If you want to become successful like them, it seems your first priority should be “export orientation”, selling stuff. “Import substitution” should be, like, tenth priority.
If you can extend your system of accountability to include people already making product X, that’s frequently going to be better than diverting productive resources already being used profitably to make product Y, to make product X instead. But the “integration” element is important; I expect vertical integration or import substitution to be profitable if it protects you from monopolistic behavior by horizontal integrationists, or if it allows you to produce intermediate goods more suitable for their purpose than can be bought externally for the same cost. I think this responds adequately to your arguments 1 and 2.
“Identical” may have been too strong, as there is an edge case where one buys a supplier and then doesn’t change anything about them. This may be formally considered “vertical integration” under some schemas, but it’s not an interesting case. But as I see it, the meaning of expressions like “vertical integration” or “import substitution” is their functional relation to the long-run profitability of a firm/state. And that if we don’t make an unprincipled distinction between Westphalian states and other sorts of firm, the distinction collapses. Production of a good by immigrants who used to make it for export in the old country, or by people living in newly annexed territory, would generally still be considered “import substitution,” and that’s strongly analogous to the sorts of “vertical integration” cases you mentioned.
3 seems confused. I didn’t bring up Apple and Amazon to suggest that import substitution is the most profitable strategy considered in terms of external currency, but to suggest that even firms trying to maximize long-run profits in terms of external currency like US dollars sometimes do so more effectively through developing their supply chains in-house than they could by focusing solely on exports. A fortiori people who aren’t dollar-nihilists but want anything else in life also ought to see some upside some of the time in import substitution. I then suggested some specific ways in which I thought import substitution would be profitable. Either you agree or disagree with the specifics; if “economics” recommends never doing import substitution then “economics” is obviously wrong.
Most of Apple’s manufacturing is in China and most of its sales are outside the US. I think it’s a huge success of globalism, and the same can be said about a lot of the US tech industry.
This doesn’t seem like it implies any sort of disagreement and I don’t understand why you think it’s relevant additional information in this context. Maybe you’re treating vertical integration as a very different thing from import substitution, while from my perspective they are identical; I didn’t mean to say that the USA has done well by import substitution via Apple and Amazon, but that Apple and Amazon themselves, as statelike clients of the US-led global financial system, have done well through import substitution.
Yeah, I misunderstood how you used the phrase. But the new usage also seems iffy to me.
A firm can vertically integrate by buying other firms. This doesn’t seem analogous to import substitution.
A firm can vertically integrate to make a product that can’t be bought from elsewhere. I’d argue that’s what Apple and Amazon did. Can you really say they were doing the equivalent of protecting their market from imported cheap steel, like a country doing import substitution industrialization? Could they get software as good as iOS or AWS from elsewhere for cheaper? No they couldn’t, that’s why they built it. It’s not import substitution if there’s no “import” to substitute. And when good “import” is available, they’re happy to use it: Apple relies on Foxconn for manufacturing, and Amazon relies on lots and lots of sellers.
And most importantly, countries do import substitution to become less dependent on the market. But for a firm, the whole point is to sell stuff on the market. Apple and Amazon are successful because they sell lots of stuff. If you want to become successful like them, it seems your first priority should be “export orientation”, selling stuff. “Import substitution” should be, like, tenth priority.
If you can extend your system of accountability to include people already making product X, that’s frequently going to be better than diverting productive resources already being used profitably to make product Y, to make product X instead. But the “integration” element is important; I expect vertical integration or import substitution to be profitable if it protects you from monopolistic behavior by horizontal integrationists, or if it allows you to produce intermediate goods more suitable for their purpose than can be bought externally for the same cost. I think this responds adequately to your arguments 1 and 2.
“Identical” may have been too strong, as there is an edge case where one buys a supplier and then doesn’t change anything about them. This may be formally considered “vertical integration” under some schemas, but it’s not an interesting case. But as I see it, the meaning of expressions like “vertical integration” or “import substitution” is their functional relation to the long-run profitability of a firm/state. And that if we don’t make an unprincipled distinction between Westphalian states and other sorts of firm, the distinction collapses. Production of a good by immigrants who used to make it for export in the old country, or by people living in newly annexed territory, would generally still be considered “import substitution,” and that’s strongly analogous to the sorts of “vertical integration” cases you mentioned.
3 seems confused. I didn’t bring up Apple and Amazon to suggest that import substitution is the most profitable strategy considered in terms of external currency, but to suggest that even firms trying to maximize long-run profits in terms of external currency like US dollars sometimes do so more effectively through developing their supply chains in-house than they could by focusing solely on exports. A fortiori people who aren’t dollar-nihilists but want anything else in life also ought to see some upside some of the time in import substitution. I then suggested some specific ways in which I thought import substitution would be profitable. Either you agree or disagree with the specifics; if “economics” recommends never doing import substitution then “economics” is obviously wrong.