Innovation and job creation in a global economy: the case of Apple's iPod

Abstract

Globalization skeptics argue that the benefits of globalization, such as lower consumer prices, are outweighed by job losses, lower earnings for U.S. workers, and a potential loss of technology to foreign rivals. To shed light on the jobs issue, we analyze the iPod, which is manufactured offshore using mostly foreign-made components. In terms of headcount, we estimate that, in 2006, the iPod supported nearly twice as many jobs offshore as in the United States. Yet the total wages paid in the United States amounted to more than twice as much as those paid overseas. Driving this result is the fact that Apple keeps most of its research and development (R&D) and corporate support functions in the United States, pro-viding thousands of high-paid professional and engineering jobs that can be attributed to the success of the iPod. This case provides evidence that innovation by a U.S. company at the head of a global value chain can benefit both the company and U.S. workers. 1 This article represents solely the views of the authors and not the views of the U.S. International Trade Commission or any of its individual Commissioners. This paper should be cited as the work of the authors only, and not as an official Commission document. All of the authors are associated with the Personal Computing Industry Center (PCIC) of the