The global value of technology

[David Farber <dave () farber net>]

Begin forwarded message:

From: "Steven M. Bellovin" <smb () cs columbia edu>
Date: June 28, 2007 5:15:54 PM EDT
To: dave () farber net
Subject: The global value of technology

There's a fascinating article in today's NY Times on the value put into
the iPod by different countries.  The article itself is at
http://www.nytimes.com/2007/06/28/business/worldbusiness/28scene.html? 
ref=technology
and it's based on a research report at
http://pcic.merage.uci.edu/papers/2007/AppleiPod.pdf

Briefly, the researchers examined the major components of the iPod and
attempted to understand which country profited and by how much.  The
iPod is assembled in China, but many of the parts come from elsewhere.
The disk comes from Toshiba, a Japanese company, so they profit from
it.  However, the drive isn't actually manufactured in Japan, it's
manufactured in China or the Philippines.  Similarly, some of the major
chips are from American suppliers, but the chips themselves are made in
Taiwan.

A point made is that it's hard to assess the real economic impact of
something just by looking at simple numbers.  The article notes that

        The researchers estimated that $163 of the iPods $299 retail
        value in the United States was captured by American companies
        and workers, breaking it down to $75 for distribution and retail
        costs, $80 to Apple, and $8 to various domestic component
        makers. Japan contributed about $26 to the value added (mostly
        via the Toshiba disk drive), while Korea contributed less than
        $1.

and that

        Even though Chinese workers contribute only about 1 percent of
        the value of the iPod, the export of a finished iPod to the
        United States directly contributes about $150 to our bilateral
        trade deficit with the Chinese.


                --Steve Bellovin, http://www.cs.columbia.edu/~smb


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