Where
was your iPod made?
$163 of the iPod’s $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.
The unaccounted-for parts and labor costs involved in making the iPod
came to about $110. The authors hope to assign those labor costs to the
appropriate countries, but as the hard drive example illustrates, that’s
not so easy to do.
This value added calculation illustrates the futility of summarizing
such a complex manufacturing process by using conventional trade
statistics. 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.