Trade effects of 3D printing (that you didn’t hear about)

From VOX post by Caroline Freund, Alen Mulabdic, and Michele Ruta:

“The conventional wisdom is that 3D printing will shorten supply chains and reduce world trade. This column examines the trade effects of the shift to 3D printing in the production of hearing aids. It shows that adopting the new technology in production increased trade by roughly 60% as production costs came down. An analysis of 35 other products that are increasingly produced using 3D printing also finds positive effects but suggests that product characteristics such as bulkiness can affect the relationship between 3D printing and trade.

Will 3D printing disrupt world trade? The new technology has been accompanied by predictions of a future where goods will be printed locally, global supply chains will be shortened, and international trade will be dramatically reduced. Firms (and perhaps even consumers) will be able to create a solid three-dimensional object from a digital file and will no longer need to import printable goods and components. One study calculates that as much as 40% of trade could be eliminated by 2040 (Leering 2017). Other studies acknowledge that the impact of 3D printing on trade may be complex but still find that 3D printing and automation could lower world trade by 10% by 2030 (Lund and Bughin 2019).

In contrast, many earlier improvements in production processes that have reduced real costs have boosted international trade. The industrial revolution is perhaps the best example, where a transformation in technology and management practices brought huge productivity gains, output growth, and expanding trade. The digital revolution of the 1990s had a similar boosting effect on world trade through the rise of global supply chains (Baldwin 2016). The impact of 3D-printing technology on world trade is, therefore, an empirical question.

We address this question in a new paper (Freund et al. 2019), focusing on hearing aids, a product that since the mid-2000s has almost exclusively been produced with 3D printing. We then extend the analysis to 35 other products that are increasingly using 3D printing. The evidence suggests that firms (and countries) will continue to specialise and 3D printing will stimulate rather than hamper trade growth.

The 3D printing revolution in hearing aids

The good where 3D printing is most prevalent is hearing aids. Nearly 100% of all hearing aids consumed in the world are produced using 3D printing.  3D printers transformed the hearing aid industry in less than 500 days in the mid-2000s, which makes it a unique natural experiment to assess the trade effects of this technology (Figure 1).”


Figure 1 Adoption of 3D printing for custom hearing aids at Phonak

Source: Brans (2013)

Continue reading here.



Posted by at 10:59 AM

Labels: Inclusive Growth


Subscribe to: Posts