@RobertERitz @natso_much There was an NYT article a very long time ago on the production chain for Apple's iPhones. They looked at everyone involved in making these phones, from the people who mine the metals to the designers in Cupertino.
@RobertERitz @natso_much They also figured out who gets what part of the pie.
In the end, the ppl who got the biggest piece of the pie were designers in Cupertino. In almost every goods-based industry, the people who are capturing the most value are ppl who are engaged in knowledge-intensive services
In the end, the ppl who got the biggest piece of the pie were designers in Cupertino. In almost every goods-based industry, the people who are capturing the most value are ppl who are engaged in knowledge-intensive services
@RobertERitz @natso_much This can involve design, engineering, law, medicine, or other types of services. For something like a cashmere knit, the knowledge-intensive services part would be designing the sweater and marketing the brand.
@RobertERitz @natso_much The traditional model for econ development goes something like this: agriculture->manufacturing/ industry->high-end services. Economists used to think that you ascended these stages like steps on a staircase. First you farm, then build factories, then create service workers
@RobertERitz @natso_much This model is not so clear anymore bc some regions have skipped steps.
So to answer your question, certainly, farmers capture the lowest amount on the value chain. Going from farming to manufacturing (e.g. yarn spinning or knitting) would be a step up.
So to answer your question, certainly, farmers capture the lowest amount on the value chain. Going from farming to manufacturing (e.g. yarn spinning or knitting) would be a step up.
@RobertERitz @natso_much But this requires serious capital investment (the machines are not cheap) and know-how (knowledge is often locked into geography; see literature on "economic cluster theory"). It's not as simple as just buying the machine and turning them on.
@RobertERitz @natso_much Knowing how to knit at diff tensions is a skill. Finishing a knit is an art. And so forth.
But the real value is in designing and marketing. Think of who captures the most value in this chain: it's brands like Chanel, who outsource their manufacturing to Barrie in Scotland.
But the real value is in designing and marketing. Think of who captures the most value in this chain: it's brands like Chanel, who outsource their manufacturing to Barrie in Scotland.
@RobertERitz @natso_much Barrie, the knitwear mill, also outsources their spinning to Todd & Duncan, and Todd & Duncan outsources their farming to herders in Mongolia. The further down you go in this production chain, the smaller the piece of the pie you get in terms of the % of final retail price.
@RobertERitz @natso_much Can't say what's the best approach because economic development is so complex, no single policy fits all. Each region has to figure out what mix of policies works for them. Plus, in any case, the end consumer nowadays is not focused on the highest-quality knits.
@RobertERitz @natso_much Scotland's cashmere industry has been decimated in the last 50 or so years bc they can't compete w the high-fashion design of Italy or the low-cost of China. If I were trying to develop an economy, I would not tell them to make the best knits possible bc there's no customer
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