Chapter 23 Fragmented Trade and the Hub–spokes Game – Strategic Trade Under the WTO

In the Jones–Kierzkowski world of fragmented production, we address a strategic trade issue for development: how to industrialize under the WTO regime. One solution is to generate cross-border externalities, such as becoming the hub of a network of countries, so as to attract foreign investment with collective comparative advantage. Thus the small, remote and pre-industrial Singapore managed to organize a hub–spokes game: achieving a win-win solution for all and gaining the most as the hub. In servicing the spokes for fee, Singapore has earned First World income levels, by the twin patterns of the flying geese and the triangular accord.