Kasra Ferdows illustrates how, contrary to the prevailing perception, high-income countries continue to produce more value-added through manufacturing than all low- and middle-income countries (including China) combined. These rich countries are still ranked as the most desirable locations for manufacturing in many industries.
Please note: This paper was written and accepted well before the regulatory changes of 2025 and so does not address the current spate of tariffs.
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References
1.
See for example, FerdowsKasra, “Made in the World: The Global Spread of Production,” Production and Operations Management6, no. 2 (1997): 99-187.
2.
The share of Intermediate Goods in total world trade was 52% in Q2 2021, a ratio that has remained constant over the last decade. See: World Trade Organization, “Exports of Intermediate Goods Gain Momentum in Q2 with 47% Year-on-Year Increase,” November 3, 2021.
Organisation for Economic Co-operation and Development 2022. “International Trade Statistics: Trends in Fourth Quarter” 2021.
5.
FerdowsKasra, “Keeping Up with Growing Complexity of Managing Global Operations,” International Journal of Operations & Production Management38, no 2 (2018): 390–402, https://doi.org/10.1108/IJOPM-01-2017-0019.
Reported in “The Future of Europe: The Role of the European Business Community,” The European House-Ambrosetti, 2022. See also James Manyika et al., “Building a More Competitive US Manufacturing Sector,” McKinsey Global Institute, April 15 2021.
WenYi, “China’s Rapid Rise: From Backward Agrarian Society to Industrial Powerhouse in Just 35 Years,” Regional Economist, Federal Reserve Bank of St. Louis, April 11, 2016.
LevinsonMarc, “US Manufacturing in International Perspective,” Congressional Research Service #7-5700, R42135, February 21, 2018.
18.
Even though such macro per capita data do not change much from year to year, to avoid any COVID-related distortions, data from 2019 is used for this particular analysis.
SeeKetokoviMikkoet al., “Why Locate Manufacturing in High-Cost Countries A Case Study of 35 Production Location Decisions,” Journal of Operations Management49–51, (March 2017): 20–30; Lisa M. Ellram et al., “Offshoring and Reshoring: An Update on the Manufacturing Location Decision,” Journal of Supply Chain Management 49, no. 2 (2013): 14–22; John V. Gray et al., “Why in the World Did They Reshore? Examining Small-to-Medium Sized Manufacturer Decisions,” Journal of Operations Management 49–51, (2017): 37–51; Suzanne de Treville et al., “Valuing Lead Time,” Journal of Operations Management 32, no. 6 (2014): 337–346.
De BackerKoenet al., “Reshoring: Myth or Reality?” OECD Science, Technology and Industry Policy Papers, No. 27, January 26, 2016, https://doi.org/10.1787/5jm56frbm38s-en.
KinkelSteffan, “Industry 4.0 Application and Reshoring,” in Industry 4.0 and Regional Transformations, ed. Lisa De Propris and David Bailey (London: Routledge, 2020), 195-213.
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KharasHomi, “The Unprecedented Expansion of the Global Middle Class: An Update,” Brookings Institution, February 28, 2017.
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See for example, ShihWilly C., “Global Supply Chains in a Post-Pandemic World,” Harvard Business Review, (September-October 2020).
35.
FerdowsKasra, “Keeping Up with Growing Complexity of Managing Global Operations,” International Journal of Operations & Production Management38, no 2 (2018): 390–402, https://doi.org/10.1108/IJOPM-01-2017-0019.
Molitch-HouMichael, “Three Areas Holding Back the $10.6B 3D Printing Industry,” Forbes, last updated May 2, 2022.
39.
For example, “Offshore,” “Server,” “Outpost,” or “Source,” in addition to “Contributor” and “Lead,” are often assigned to factories in advanced countries. SeeFerdowsKasra, “Making the Most of Foreign Factories,” Harvard Business Review, March-April 1997.
