Production spread over several countries: new research shows who profits

‘Designed by Apple in California, assembled in China’ – the production processes of, for example, electronics are often a global chain. However, does most of the added value end up in the country that has invested most money and labour? Professor Marcel Timmer claims that several misleading studies have been published. In his inaugural lecture on 26 April the professor will analyse a number of trends in global value chains on the basis of the new ‘World Input-Output Database’ constructed by a European consortium led by the University of Groningen.

Inaugural lecture
Mondiale waardeketens [Global value chains]
Prof. Marcel Timmer
26 April, 4.15 p.m., Academy Building, Broerstraat 5, Groningen
Chair mandate: Economic growth and development
Faculty: Economics and Business

In his inaugural lecture, Prof. Marcel Timmer will discuss the phenomenon of global value chains. Nowadays, many products and services are the result of a complex global network of activities. Technological advancements in information and communication systems have made it profitable to spread the various stages of production, such as design and development, production of intermediate goods, assembly and distribution, over different regions. These ‘global production networks’ have a long history in agricultural-industrial sectors and, more recently, in industries such as consumer electronics.

The fragmentation of production processes goes hand in hand with increasing levels of integration between countries through international trade. Fragmentation also implies an international distribution of the value generated in the chains. Case studies, for example into the production of iPods in China, suggest that only a small part of the value of goods (less than 5%) ends up in the production country to remunerate labour and capital investment. Timmer, however, will demonstrate that these case studies can be misleading by presenting research conducted within the EU-supported ‘World Input-Output Database’ project. Trends in global value chains over the past fifteen years will be outlined on the basis of newly developed global input-output tables.