Who Captures Value in Global Supply Chains? Case Nokia N95 Smartphone
Jyrki Ali-Yrkkö & Petri Rouvinen & Timo Seppälä & Pekka Ylä-Anttila
Received: 5 September 2010 / Revised: 13 January 2011 Accepted: 29 April 2011 / Published online: 31 May 2011 # The Author(s) 2011. This article is published with open access at Springerlink.com
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. Keywords global supply chains . international trade . value capture . Nokia . mobile phones JEL Classification F 14 . F 23 . L 22 . L 23
J. Ali-Yrkkö : P. Rouvinen (*) : T. Seppälä : P. Ylä-Anttila ETLA, The Research Institute of the Finnish Economy, Lönnrotinkatu 4 B, 00120 Helsinki, Finland e-mail: email@example.com J. Ali-Yrkkö e-mail: firstname.lastname@example.org T. Seppälä e-mail: email@example.com P. Ylä-Anttila e-mail: firstname.lastname@example.org
J Ind Compet Trade (2011) 11:263–278
1 Introduction In high-income countries,
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