The logic of producing cellphones in Tierra del Fuego

An article in the Economist (Sept 24, 2011) describes the decision by Brightpoint, an Indianapolis manufacturer, to spend 15 times labor cost in Asia to set up a manufacturing plant for Blackberrys in Tierra del Fuego at the tip of Argentina and the closest point for ships to Antartica. But this was in response to a cap on phone imports into Argentina set at a level well below demand.  Similarly a Porshe dealer launching a new line of wines to export in order to cover the trade deficit associated with importing Porshes into Argentina from Germany.  Given the impact of trade restrictions on the supply chain in Argentina, will the associated increased product costs impact demand from the associated market segments ?  Given that the focus is just on trade deficits across imports and exports – what might be the unintended supply chain consequences of these regulations i.e., would new products introductions in Argentina suffer as a result ? Some economists argue that even though $ 5 billion of exports have been replaced by local production, the number may have been higher without these trade rules – how might the “road not taken” be estimated ?

About aviyer2010

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