Abstract
Available statistics reveal little about the economic consequences of the increasing global dispersion of production processes. To investigate the issue, we perform grass-roots investigative work to uncover the geography of the value added for a Nokia N95 smartphone circa 2007. The phone was assembled in Finland and China. When the device was assembled and sold in Europe, the value-added share of Europe (EU-27) rose to 68%. Even when it was assembled in China and sold in the United States, Europe captured as much as 51% of the value added, despite of the fact that it played little role in supplying the physical components. Our analysis illustrates that international trade statistics can be misleading; the capture of value added is largely detached from the flow of physical goods. Instead, services and other intangible aspects of the supply chain dominate. While final assembly-commanding 2% of the value added in our case-has increasingly moved offshore, the developed countries continue to capture most of the value added generated by global supply chains.
Original language | English |
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Pages (from-to) | 263-278 |
Number of pages | 16 |
Journal | Journal of Industry, Competition and Trade |
Volume | 11 |
Issue number | 3 |
DOIs | |
Publication status | Published - Sept 2011 |
MoE publication type | A1 Journal article-refereed |
Funding
Acknowledgements This research is a part of the ongoing collaboration between BRIE, the Berkeley Roundtable on the International Economy at the University of California at Berkeley, and ETLA, The Research Institute of the Finnish Economy. Part of the work was done within the European Commission project B2/ENTR/05/091-FC and was financed under the Competitiveness and Innovation Framework Programme (CIP) which aims to encourage the competitiveness of European enterprises.
Keywords
- global supply chains
- international trade
- mobile phones
- Nokia
- value capture