Research notes · Trade

How much of a manufactured good is made outside the country that sells it?

What the authors found

Timmer and co-authors decompose final manufacturing goods into all the labour and capital used to make them, wherever it sat, using the World Input-Output Database. They establish four trends, the first being that international fragmentation of production rose substantially — the share of foreign value in final manufactures grew steadily, and production stages that can be moved have been moved.

What our data adds

Eurostat FIGARO, a later set of accounts built for the same purpose, puts domestic value added at 63.4 per cent of gross exports across 27 EU reporters in 2024. Foreign content of 36.6 per cent is consistent with the fragmentation the authors describe having continued. The country spread is the more useful number: Germany retains 73.8 per cent of what it ships and Ireland 52.2, so a single European average conceals economies that make their exports and economies that assemble them.

What this cannot show

This is the country aggregate across all industries, and the paper's subject is manufacturing specifically — fragmentation in manufacturing is higher than in an all-industry total that includes services. FIGARO also covers 49 economies from an EU vantage point rather than the world, so it cannot reproduce a global figure. See the note on Johnson's five facts for the same caveat stated at length.

The data behind it

Related notes

• When a country exports, how much of the value was actually made there — and how far does the usual export statistic mislead us?
• Who actually paid for the 2018 US tariffs, and what did they do to the pattern of trade?
• When two countries trade with each other and neither is the United States, whose currency is the price in?

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