Distribution of power and economic rent in value networks

The paper examines factors that impact distribution of value added in global value networks. The authors measure the share of value added of each company using their own method (comparison of ROTA and average salaries) and test the most common assumptions about principles of value added distribution on three high tech knowledge-intensive industries: the civil aircraft industry, the automotive industry and the pharmaceutical industry. The most popular hypotheses, that network integrators and companies located at the ends of the smiling curve (developers of new products and firms controlling the market entry) have an advantage in the distribution of value added, proved wrong in the above-mentioned industries. Difference in salaries between countries is revealed to be the most important factor influencing distribution of value added in these networks. The second most important factor is a difference in production profitability and remuneration between industries. The degree of product’s uniqueness is another factor that has an increasing impact on distribution of value added, mostly on ROTA.

Keywords

global value networks, value added distribution, Smiling curve, international labor division, globalization, aircraft production, motor industry, pharmaceutical industry

Acknowledgment

This study was supported by the Russian Foundation for Basic Research (project 18-010-00216).

Received

19.03.2020

Publication date

20.03.2020

Number of characters

35364

Cite

GOST	Ustyuzhanina E., Dementiev V., Evsukov S. Distribution of power and economic rent in value networks // Ekonomika i matematicheskie metody – 2020. – V. 56. – Issue 1 C. 5-17 [Electronic resource]. URL: https://emm.jes.su/S042473880008468-3-1 (circulation date: 27.04.2024). DOI: 10.31857/S042473880008468-3
MLA	Ustyuzhanina, Elena, Dementiev, Victor, Evsukov, Sergey "Distribution of power and economic rent in value networks." Ekonomika i matematicheskie metody 56.1 (2020):5-17. DOI: 10.31857/S042473880008468-3
APA	Ustyuzhanina E., Dementiev V., Evsukov S. (2020). Distribution of power and economic rent in value networks. Ekonomika i matematicheskie metody 56(1), pp.5-17 DOI: 10.31857/S042473880008468-3

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