Over the last decades, technology hierachy among Pacific Basin countires could be exemplified by the rapid growth of intra-industry trade and the spread of segmentation of production network across national boundaries which is part of the process described as integration. The reason for this is because, several technological develpments since last decades or so facilitated the expansion and integration of intra-industry trade, not only among OECD countries, but aslo between industrialized and developing countires; First, progress in transportation and communication systems has substatially reduced the transaction costs of factor mobility across national boundaries. Secondly, "progressive simplification of set engineering" (Dicken 1992, p. 323) enabled the consumer electronic industry to cut down the number of componet needed. Thirdly, the wide spread automation of production process standardizes the skills of labors needed in the assemble stage of productions throughout the globe. Therefore, it is fairly easy for the firm to physically separate the stages of production and or to decompse the production processes in accordance with production characteristis at various production stages. More precisely, globalization exists primarily to enable MNCs to disintegrate their production lines across national boundaries in accordance with the nature of their production stages in order to exploit comparative advantages in the hosting less developed countries.
The cost-driven FDI strategy, analyzed my John Dunning, from technological advanced countries had compartmentalized production process in accordance with technology hierarchies and dynamic comparative advantage in hosting nations. Hence, a well integrated global production network, which was facilitated by mobile capitals from MNCs and financial liberalization undertaken in the NICs, was emerging rapidly. For example, in consumer electronic industries, each of the major stages of production has different production characteristics; the design stage of consumer electronics usually involves research-intensive process whcih required hight quality of human capitals.
