The manufacturing stages, especially for keey componet such as TV screen tubes, is highly capital intensive. Hence, economies of scale production is necessary to maintain cost effective. Finally, in the assemble stage under which automation and standard technology are prevalent, the demand for labor is pre-dominated by low-skilled, cheap labor. Therefore, globalization of production network was fostered by the changing production techniques, and the pattern of new division of labor was primarily based on techological advancements among nations. (10).
Let's take a look at a semi-conductor goods produced by a MNC giant known as General Electric. Such comodity is generally considered as a high-tech industry. It has three major product groups; the integrated circuit, diodes and transistors. The general sequence of semi-conductor production includes 5 major stages; 1) design of new circuit, 2) production of masks, 3) fabrication of wafers, 4) assembly of integrated circuit, and 5) final testing and shipping. The stage of design and wafer fabricatipon requred high powered scientific and engineer personnel whereas final assembly would only require low-skill labor. Because each stabge has unique production characteristics which is different from the other, and neither of them has to locate close to each other geographically, so the decomposition of production lines which are further facilitated by low cost of transport and communication system has speeded up the globalization of manufacturing activites. Therefore, an international prodcution network based on global scale, rather than pure nation level has become MNCs strategies in today's internation business. Hence, a vertial division of labor according to technological heirarchy across national boundary was reinforced bt the rapid growth of intra-industry trade. .
Since the mid-1980's, trade in intermediat goods and or semi-finished products dictated the major trade flows between Japand and other developing Asian countries and between the NICs and the ASEAN.