Made in the World

Summary

This script discusses the limitations of 'Made In' labels in a globalized production era. It uses a mobile phone as an example, illustrating how it's assembled from 600 components and software from various countries. The 'Made In' label only indicates the final production stage, which can be misleading. The phone's value is distributed globally, with Europe leading in value addition due to branding and design. The script concludes that 'Made In the World' better reflects the reality of global production and is crucial for understanding trade and development.

Takeaways

• 🌐 The 'Made in' label is outdated as it does not reflect the global nature of supply chains.
• 📱 A mobile phone exemplifies the complexity of global production with components and design from multiple countries.
• 📊 The value of a product is distributed across different countries, not just the final assembly location.
• 💼 Administrative tasks play a significant role in value addition, often performed in Europe.
• 🔩 Hardware components are sourced from a mix of regions including Europe, Asia, and the United States.
• 💻 Software design is a global effort with contributions from countries like Finland, the UK, USA, Germany, and Japan.
• 🏭 Final assembly and mass manufacturing are conducted in countries like Finland and China.
• 🌍 Europe dominates with 51% of the value added due to its role in branding, development, design, and administration.
• 📈 North America accounts for 28% of the value added, primarily from sales.
• 📊 Asia contributes 16% to the value added, highlighting its role in manufacturing and assembly.
• 🌟 The concept of 'Made in the World' better represents the reality of global production and trade.

Q & A

Why is the traditional 'Made in' label considered outdated?

The traditional 'Made in' label is outdated because it only refers to the final stage of production, which can be misleading in today's global supply chains where products are often assembled from components made in various countries.

What is an example of a product that has a complex global supply chain?

A mobile phone is an example of a product with a complex global supply chain, involving design in Finland, export from China, and sale in the United States.

How many individual components does the mobile phone mentioned in the script have?

The mobile phone mentioned in the script has 600 individual components.

What percentage of the mobile phone's retail price is attributed to hardware components?

Hardware components account for 33% of the mobile phone's retail price.

What does the 4% of the retail price represent in terms of the mobile phone's production?

The 4% of the retail price represents software design, mainly licenses and copyrights.

How much of the mobile phone's retail price is due to research and administrative tasks?

Research and administrative tasks account for 47% of the mobile phone's retail price.

What is the percentage of the retail price that goes to the actual assembly of the mobile phone?

The actual assembly of the mobile phone accounts for only 2% of the total value.

Where are the administrative tasks for the mobile phone's production mainly done?

Administrative tasks are mainly done in Europe, specifically in Finland and the UK.

What percentage of the value added in the mobile phone's production comes from Europe?

Europe has 51% of the value added in the mobile phone's production.

How much of the value added comes from North America where the phone is sold?

North America contributes 28% of the value added in the mobile phone's production.

Why is it difficult to attribute a nationality to the mobile phone discussed in the script?

It is difficult to attribute a nationality to the mobile phone because many countries participated in the production process, creating employment and income for people from different nationalities across different regions.

What term better represents the reality of global production according to the script?

The term 'Made in the World' better represents the reality of global production, as it acknowledges the many countries involved in the production process.

Why is measuring where the value comes from in global production important?

Measuring where the value comes from in global production is important to help governments and analysts understand the relationship between trade and development, and to put bilateral trade imbalances between countries into a more realistic perspective.