Arnold Kling  

Roundabout Production

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What Economic Theory Doesn't S... Shaky Banks...

Timothy Taylor writes,


Here's a table combining several studies, showing a rise in foreign value-added in exports from 18% in 1970 to 24% in 1990, 27% in 1995, and 33% by 2005. This is a sign of longer global supply chains and rising global interconnectedness.

He is citing an IMF study. I would use these data to argue that production is becoming more roundabout. Perhaps this means that the Austrian approach to describing the production process is increasingly relevant. In mainstream economics, the focus is on the production function rather than on roundabout production. For Austrian economists, it is the reverse.

Once again, let me commend Taylor's blog. He posts once or twice a day, and nearly every day I am tempted to refer to what he writes.


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COMMENTS (2 to date)
fender writes:

... and IMF is reffering to Hummels et al.
http://www.newyorkfed.org/research/staff_reports/sr72.pdf

JCE writes:

what exactly is the difference between the production function and the roundabout approach

canĀ“t the production function be also described as roundabout?

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