Supply chains in international trade

Supply chains in international trade

Supply chains in international trade

Supply chains have become much more complex in recent

decades. The computer chip manufacturer, Intel, might

commission a Swedish firm of engineers to design a new chip. The

design is emailed to a chip manufacturer in Taipei who exports

 45  (OECD Insights: (International Trade

the chips to a Malaysian circuit board manufacturer who exports

the board to Ireland which, in turn, exports the computers to the

EU with after-sales service provided by a call centre in Bangalore,

India. If you included all the actors and steps needed to make a

computer, the description would fill a few pages of this book. This

makes describing the (trade) in such products difficult. In 2006,

computers were the highest valued export item from China and

digital integrated circuits were one of China’s largest imports. To

further complicate matters, digital integrated circuits were also

one of China’s largest export products. In fact, after oil, integrated

circuits were the second largest world export item in 2006.

A look at national statistics on manufacturing shows just how

important components have become. In the United States, the

average share of components in the output of the manufacturing

sector was 35% while in the nonmanufacturing sector the figure

was less than 9%. The ratios are quite similar in the other major

OECD countries. In Germany, the ratio was 40.8% in manufacturing

to 8.5% in nonmanufacturing. In emerging (economies), such as

Brazil and China, the share of manufactured intermediates in

the manufacturing sector was between 40% and 50%. Within

manufacturing itself, the sectors with the highest share of use of

components in the OECD countries are motor vehicles (58.6%)

and office, accounting and computing machinery (54.3%). For the

emerging economies, the sectors with the highest share of use of

components were electrical machinery and apparatus (55.8%) and

motor vehicles (53.1%).