8. With the rise of globalization, supply chains are spread across the world. Suppose the following are the stages of producing pencils in Germany:

• A German-based pencil company develops the designs for the pencil. It’s a ground-breaking design that is ergonomic, easy to carry, and doesn’t roll when left on a table.

• Graphite, which is the writing core of the pencil, is a mineral mined in Brazil and €10 billion worth of graphite is sold to China.

• Softwood, which encases the graphite, is imported from South Africa to China where a Chinese plant manufactures the body of the pencils along with the graphite inside. These are then exported to Kazakhstan for €16 billion.

• Kazakhstan produces a non-toxic paint. A factory in Kazakhstan paints the pencils and sells them to Germany for €18 billion.

• The rubber that is used to produce the eraser on top of the pencil is derived from tropical plants grown in Malaysia.

• The aluminum that goes into the production of the ferrule that encases the eraser is produced in Mozambique.

• The German company imports rubber and graphite for a total of €7 billion and manufactures the eraser tips, which it then adds to the rest of the pencil.

• The company sells the finished pencils to German retailers for €33 billion.

• The retailers sell the pencils within Germany, for a total of €39 billion in revenue.

a. Calculate how much this process contributes to German GDP. Explain your calculation.

b. What sources of value might not be captured in your calculation in part (a)?