The SPECIFICS OF VALUE ADDED CREATION UNDER THE CONDITIONS OF GLOBAL PRODUCTION NETWORKING
Under the conditions of growing development of global production networks and production fragmentation manufacturing tends to move from developed economies into developing countries. The expansion of global value chains (GVC) creates many challenges for transitional economies and requires an appropriate correction of economic policy. Systematic analysis of the prerequisites, organizational structure and critical resources of value added creation in GVCs and global production networks has been provided. Theoretical analysis has been made as to the value added redistribution in GVCs with a "smiling curve" model. According to the model, the companies increase profitability by reducing the total production expenses and switch from material to intangible processes that generate a great weight of value added. The criteria that international corporations consider when deciding on production outsourcing have been summarized. The main tendencies of the foreign trade in final and intermediate products of the USA, Germany, Japan and China in the high technology sector have been analyzed. A deep insight has been given into the supply chains of the Apple Inc. as a leader in GVCs. Based on the case of the smartphone iPhone value chains, the positions of some countries in value added creation have been shown. The main ecosystem of iPhone production is concentrated in China, where about 70 % of supplier companies' affiliates are located. Based on the data about bilateral trade between the United States and China, it has been estimated that the negative balance with China amounts to almost 50 % of the total US trade balance. However, by calculating the US foreign trade flows in the iPhone trade, based on the value-added approach, the research has determined that the majority of value added is actually generated in the USA, while with China, in fact, there is a positive trade balance. The benefits and potential dangers of joining the lower segments of GVCs and ways to promote integration into high value added segments have been discussed.