Why is Interstellar Trade So Important in the SW Galaxy?

[Spartan]

I've been giving the economics of the SW Galaxy some thought lately.

1. Why given the: prevalence of droids, recycling, and the vast materials, avalible in any planetary system; is interstellar trade so important.

2. Does the ease of hyperspace travel really, make distant resources a better economic choice that producing them locally?

3. Why should any developed world be economically, dependent on another?

Now, I understand that there must be reasons for this arrangement. But this is something that is so prevalent in scifi, I think it bears some though. After all wars are always about economics.


Your thought?

[General Zod]

some worlds may have resources that others simply don't have, and are desired elsewhere. and remember that a good majority of the planets are colonies, and dependent on the governing body for support. it's the same reason that nations that might be independent in the modern era trade with each other. supply and demand. plus no world wants to overtax its resources, so they get support from other worlds.

[Howedar]

Specialization in one field is more efficient than producing a little bit of everything. Economies of scale.

[D.Turtle]

Additionally, if you have planets with trillions of beings on them, they can't support themselves (the planets).

Resources (even if only raw resources) have to be brought to that planet.

You could compare it with the situation nowadays, with every town being a planet or star system.

There are towns (smaller ones) that can and still do (at least partly) sustain themselves, however the bigger cities have to get resources from outside, and in the western world even all the small towns get resources from outside (because it is cheaper that way).

It is simply (IMO) a matter of scale.

Also, your second question is counterproductive: Since hyperspace travel is so easy and cheap you can depend on interstellar trade to sustain your world.

Like nowadays: Since it is so easy and cheap to move resources from point A to point B on Earth, you can have larger cities etc.

[Master of Ossus]

1. Uneven distribution of resources.
2. Specialization.

These are the two fundamental reasons for any economic trade to take place, and both are completely scalable from two cavemen up to a Galaxy, or even a universe. Resources WILL be distributed very unevenly among different planets, and even if every planet had identical resources, it would STILL be beneficial for them to trade, so that each planet could specialize in the production of a few key goods. That way, their workers and industrial facilities could be specialized for manufacturing those specific areas of goods (it's almost always better to build a large factory than two smaller ones). Since hyperdrive transportation seems to be cheap and efficient in the SW Galaxy, it makes sense for them to specialize different worlds to the manufacture of certain goods.

[Spartan]

Specialization can also be a weakness however. How many times have we been told in the EU that the only source for something; and "Oh no! we have a crisis". Bacta War, etc, etc...

Thanks for the response guys, all were very good points.

[PainRack]

Specialization can also be a weakness however. How many times have we been told in the EU that the only source for something; and "Oh no! we have a crisis". Bacta War, etc, etc...

Thanks for the response guys, all were very good points.

But see, that point is invalid. The Bacta war seems to imply that Thyferra is the only planet that produces bacta, yet, we know from the guidebooks, and from Tales of the Republic(ignoring its canoical status) that Thyferra bacta cartels has set up bacta production facillities on other planets.


So, it isn't a question of how isolated one source of materials are, its the abundance. For example, Malaya was the world top exporter of rubber and tin, vital to the Allied war effort. Yet, when Malaya was conquered by the Japanese, America simply turned to a secondary source in Brazil, South Africia and America itself to churn out the goods. Similarly, Bacta War only showed the importance of Thyferra, when a drastic need to increase supply in bacta was required.

[nightmare]

Anyone remember the fire in one factory in Japan back in the 90s? It produced 40% of the RAM memory circuits in the world. A 8 MB chip got up to over a hundred dollars a piece. That's specialization for you. But now we have plenty of memory again, and much cheaper than it ever was back then.

[Stormbringer]

Specialization can also be a weakness however. How many times have we been told in the EU that the only source for something; and "Oh no! we have a crisis". Bacta War, etc, etc...

Thanks for the response guys, all were very good points.

But see, that point is invalid. The Bacta war seems to imply that Thyferra is the only planet that produces bacta, yet, we know from the guidebooks, and from Tales of the Republic(ignoring its canoical status) that Thyferra bacta cartels has set up bacta production facillities on other planets.


So, it isn't a question of how isolated one source of materials are, its the abundance. For example, Malaya was the world top exporter of rubber and tin, vital to the Allied war effort. Yet, when Malaya was conquered by the Japanese, America simply turned to a secondary source in Brazil, South Africia and America itself to churn out the goods. Similarly, Bacta War only showed the importance of Thyferra, when a drastic need to increase supply in bacta was required.

And of course that also ignores that the Empire gave the cartel to the two Thyferran companies (as opposed to other worlds and companies) in order to control the supply. Had he not there can and would have been more of a supply.

[Peregrin Toker]

Additionally, if you have planets with trillions of beings on them, they can't support themselves (the planets).

Don't forget that some planets could be so polluted that they can't produce food themselves, and may have to import it from other planets...

And that's before we get to planet which might be populated but lack atmosphere (the entire population could live in fully-enclosed, sealed buildings or vast underground complexes) - these will obviously have to import air from other planets.

[Spanky The Dolphin]

Additionally, if you have planets with trillions of beings on them, they can't support themselves (the planets).

Don't forget that some planets could be so polluted that they can't produce food themselves, and may have to import it from other planets...

Or simply so populated and developed that they have no space to grow and raise their own food.

And that's before we get to planet which might be populated but lack atmosphere (the entire population could live in fully-enclosed, sealed buildings or vast underground complexes) - these will obviously have to import air from other planets.

More likely that they would create it themselves through artificial means. I find the idea of importing air to be rather absurd.

[LordShaithis]

*prepares for incoming Spaceballs jokes*

[Rogue 9]

[Dark Helmet]You are now our prisoner! And you will remain so until such time as all of the air is transferred from your planet... [dramatic pause] ...to ours. [/Dark Helmet]

[Ted C]

1. Why, given the prevalence of droids, recycling, and the vast materials avalible in any planetary system, is interstellar trade so important.

2. Does the ease of hyperspace travel really make distant resources a better economic choice that producing them locally?

3. Why should any developed world be economically dependent on another?

I can only answer this by applying my experience working at an automobile factory.

The Nissan plant in Smyrna, TN assembles cars and light trucks. Each vehicle requires parts, and only a few of those parts are produced at the plant. Even for parts produced at the plant (mostly stamped sheet metal pieces), the raw material (coil steel) comes from an off-site supplier.

Last year, production at the plant slowed and nearly stopped because of a union lockout on the US west coast. Containers of parts from Japan weren't getting unloaded, so they weren't getting put on trains for delivery to the assembly plant in Smyrna. Nissan wasn't the only company affected, either. Virtually any business that imported supplies from Asia suffered.

The Galactic Republic might easily have similar problems. A factory on Corellia might make a component of a starship assembled at Mon Calamar. If Corellia abruptly stops shipping that part, the manufacturer at Mon Calamar has to scramble to find a replacement supplier and wait for a new supply line to ramp up. Worse, if no one else makes the part, they have to send out specifications, approve designs, test the new part, and then wait for the supply line to ramp up.

The issue is that a needed commodity on Coruscant may require components from numerous different planets, and a supply break down on any of those sources may have severe repercussions at the end of the line. For example, Nissan might have plenty of engines, drive trains, frames, and so forth, but if they run out of a particular hex-bolt that attaches the engine to the frame, the whole assembly line shuts down until they can restock on those hex-bolts.

As for the benefit of importing parts instead of producing them locally, that's simply a matter of cost. If a distant supplier can make and ship the parts for less than it would cost you to produce them locally, then it makes economic sense to import them. That's why the United States has such a huge trade deficit today. The main cost difference in the modern world is labor. That may or may not be the driving factor in the Galactic Republic, but something makes it more economical to have the Trade Federation bring you parts or products than simply constructing a factory and building them locally.

Take a world like Naboo: they apparently have no heavy manufacturing facilities, so items like speeders, starships, and other industrial products probably have to be imported. Take a look at Coruscant: the planet has a huge population and little or no agriculture, so they must import a large amount of food.

It shouldn't be difficult for a planet of moderate population with all the benefits of the Republic's technology to be self-sufficient, but it's probably a bit more expensive and the galactic economy (complete with cheap interstellar transport) normally makes it unnecessary.

[Master of Ossus]

At least in the current global economy, vertical integration has long since proven cost-ineffective in all but the most specialized markets, due to the advantages of specialization. A smaller sub-contractor can almost always specialize in the construction and design of a particular raw material, which is then passed on up the line of manufacturers until a consumer finally picks up a finished product. This wasn't always the case (for example, prior to about 1930 vertical integration was extremely important to a company because other companies had such poor reliability and charged exorbitant overhead costs), but with the decrease of shipping expenses and the increased economies of scale caused by improvements in manufacturing technology, horizontal integration became more cost-effective in most cases, and the need for vertical integration disappeared almost entirely for major corporations. While there are occasionally instances in which specialization causes temporary damage to the economy as a whole, on a whole it is DRAMATICALLY more efficient, and this would not change in an economy depending on scale.

In short, specialization is overall a good thing and problems associated with it tend to be extremely small in scale and extremely short in duration. The benefits of specialization in the economy would not change as the economy was scaled upwards from a global one to a Galactic one, so long as shipping costs remained similar. Thus, the importance of intergalactic trade is actually clear evidence that shipping costs are comparatively small in the SW Galaxy, and that their manufacturing capabilities are comparatively sophisticated.

[Spartan]

Don't forget that some planets could be so polluted that they can't produce food themselves, and may have to import it from other planets...

And that's before we get to planet which might be populated but lack atmosphere (the entire population could live in fully-enclosed, sealed buildings or vast underground complexes) - these will obviously have to import air from other planets.

True....but last time I checked hydroponic farming can be done anywhere with artificial lighting, water, and the requisite chemicals. If your going to be build habitation at those densities, its hard to understand why this would not be a possibility. Nevermind the technological methods that they probably possess for making synthetic foods.

Think about it this way if the agricultural planets, are actually growing things in the "ground" there are lots of natural limits to productivity: pest, rainfall, avalible light, etc. Now Courscant has a great many multi-kilometer tall structure, and immense volumes that could easily accomadate, hydrophonic farming on an arbitrarily vast scale. You could even expand that to lightweight orbital hydrophonic farms. I would expect the that such local sources would be cheaper that shipping other systems: ie no freight, import duties, tarriffs, lower energy costs, etc.

On a side note they most likly would not need to import air, it could either be fractioned from rock, or mined from iceteroids in the outer systems cheaply.

[Spartan]

Ted C and MOS, thank you for your comments, they are most inciteful.

Here's another thought, there are a great number of Mega-corporations in SW. How important is corporate branding in the Galaxy? How cuttroat are the corporate rivalries? I know that the TF assasinated some representatives of Kuat, but is that as bad as capitalism gets in SW?

[PainRack]

Ted C and MOS, thank you for your comments, they are most inciteful.

Here's another thought, there are a great number of Mega-corporations in SW. How important is corporate branding in the Galaxy? How cuttroat are the corporate rivalries? I know that the TF assasinated some representatives of Kuat, but is that as bad as capitalism gets in SW?

That's a bit diffcult to tell, considering that the SW economy has been dominated by monopolies/cartels etc etc etc for all of canonicity.

[Peregrin Toker]

Don't forget that some planets could be so polluted that they can't produce food themselves, and may have to import it from other planets...

And that's before we get to planet which might be populated but lack atmosphere (the entire population could live in fully-enclosed, sealed buildings or vast underground complexes) - these will obviously have to import air from other planets.

True....but last time I checked hydroponic farming can be done anywhere with artificial lighting, water, and the requisite chemicals. If your going to be build habitation at those densities, its hard to understand why this would not be a possibility. Nevermind the technological methods that they probably possess for making synthetic foods.

Erm... I will here have to refer to Spanky's comment about some planets being so overpopulated that there's not room for hydroponic facilities.

BTW - what about planets where melting of the polar ice caps have caused all land to sink, such as Kamino?? They will have to import various things which must be produced on the surface. (of course, I recall reading that the Kaminoans have some offworld colonies)

On a side note they most likly would not need to import air, it could either be fractioned from rock, or mined from iceteroids in the outer systems cheaply.

How?

[Spartan]

Erm... I will here have to refer to Spanky's comment about some planets being so overpopulated that there's not room for hydroponic facilities.

BTW - what about planets where melting of the polar ice caps have caused all land to sink, such as Kamino?? They will have to import various things which must be produced on the surface. (of course, I recall reading that the Kaminoans have some offworld colonies)

I beleive you have not understood my points. Its is not possible for them to lack the space for hydroponic farming. With a carefully controlled closed loop enviroment and systhetic food synthesis an average human can be easily sustained on a volume equivalent to 1 liter!

Think for a moment about the quality of life seen in the movies. Does everyone live right on to of one another ? No. Most of the habitable areas we see are quite spacious. If they can afford to build, such spacious living quarters, they can easily accomadate some hydroponic farms.

Also a planetary system has a vast amount of space, are you suggesting that large orbital farms are not possible or economicaly feasible?

Last it doesn't matter if the planet is completely inadated with water, their are real life sea farms. Also if the Kaminoain's can spare the space to build vast artificial training enviroments for the clonetoopers, how hard could it be assign some of that space to food production or home grown manufacturing.

How?

I could think of a number of ways, I'll give you the obvious ones.

1. The most abundant elements in any star system during formation, are volatiles: hydrogen, oxygen, etc. Now a system with planets should have comets, ice covered moons, etc. Fly to yonder bodies, deploy droid, mine said volatiles, compress them to gas, and fly them back to your chosen planet. Alternately simply move the body into a more convient orbit.

2. The primary constituent of a terrestrial planets crust is silicon dioxide (SO2). Mines some rock, heat it till it vaporizes, use magnetic fields to seperate the resultant gas, voila you got free oxygen. We can do this now by the way, so I see no reason why it should be a problem for even the poorest colony in SW.

[Publius]

How cuttroat are the corporate rivalries? I know that the TF assasinated some representatives of Kuat, but is that as bad as capitalism gets in SW?

Arakyd Industries used mechanical infantry and artillery to storm a rival's corporate headquarters and seize control of its assets in a literal "hostile takeover" (ref. HoloNet News). The Corporate Alliance launched an armoured cavalry assault to prevent patent infringement (op. cit.). The InterGalactic Banking Clan's Securities and Collections Division consists chiefly of self-aware guided missile platforms. Corporate rivalry in Star Wars is better described as "industrial warfare".

PUBLIUS

[Murazor]

There may be some political reason. Planets that need each other are less likely to try something against the Galactic Republic/Empire. And nothing is 100% efficient, so the recycling things must have a limit. And a planet as developed as Coruscant more than likely does not have many resources to exploit.

[Darth Fanboy]

Trade allows for consumption beyond production capacity.

[Peregrin Toker]

Last it doesn't matter if the planet is completely inadated with water, their are real life sea farms.

This shouldn't cause problems for aquatic species like Kaminoans and Mon Calamari, who have evolved from seals and fish respectively - but, say, humans, IIRC, can't live entirely off food which comes from 'neath the waves. (unless, of course, they've interbred with Deep Ones)

[Spanky The Dolphin]

Simon, what's so hard to understand here?