The Value Chain of a Product Any product has many different activities involved in its manufacture. Panel (a) lists some of these activities for a given product in the order in which they occur. The value chain in (b) lists these same activities in order of the amount of high-skilled/low-skilled labor used in each. In panel (b), the assembly activity, on the left, uses the least skilled labor, and R&D, on the right, uses the most skilled labor. Because we assume that the relative wage of skilled labor is higher at Home and that trade and capital costs are uniform across activities, there is a point on the value chain, shown by line A, below which all activities are offshored to Foreign and above which all activities are performed at Home.