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Who Captures Value in Global Supply Chains? Case Nokia N95 Smartphone

Author

Listed:
  • Jyrki Ali-Yrkkö

    ()

  • Petri Rouvinen

    ()

  • Timo Seppälä

    ()

  • Pekka Ylä-Anttila

    ()

Abstract

Available statistics tell us little about the economic consequences of increasing global dispersion of production processes. In order to shed light on the issue, we perform grass roots detective work to uncover the geography of value added in the case of a Nokia N95 smartphone circa 2007. The phone was assembled in Finland and China. In the case when the device was assembled and sold in Europe, the value-added share of Europe (EU-27) rose to 68%. Even in the case 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 had 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 physical goods flows. It is rather services and other intangible aspects of the supply chain that 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 gener-ated by global supply chains.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Jyrki Ali-Yrkkö & Petri Rouvinen & Timo Seppälä & Pekka Ylä-Anttila, 2011. "Who Captures Value in Global Supply Chains? Case Nokia N95 Smartphone," Journal of Industry, Competition and Trade, Springer, vol. 11(3), pages 263-278, September.
  • Handle: RePEc:kap:jincot:v:11:y:2011:i:3:p:263-278
    DOI: 10.1007/s10842-011-0107-4
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    File URL: http://hdl.handle.net/10.1007/s10842-011-0107-4
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    References listed on IDEAS

    as
    1. Bronwyn H. Hall, 2010. "The Financing of Innovative Firms," Review of Economics and Institutions, Università di Perugia, vol. 1(1).
    2. Henri Capron & Michele Cincera, 1998. "Exploring the Spillover Impact on Productivity of World-Wide Manufacturing Firms," Annals of Economics and Statistics, GENES, issue 49-50, pages 565-587.
    3. repec:adr:anecst:y:1998:i:49-50:p:22 is not listed on IDEAS
    4. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-1997, December.
    5. Inklaar, Robert & Timmer, Marcel P., 2008. "GGDC Productivity Level Database: International Comparisons of Output, Inputs and Productivity at the Industry Level," GGDC Research Memorandum GD-104, Groningen Growth and Development Centre, University of Groningen.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    global supply chains; international trade; value capture; Nokia; mobile phones; F 14; F 23; L 22; L 23;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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