3. New lnlernolionol Division of lobour

Specimen Questions1. Discuss the couses of ond impoct of the emergence of the new internotionol

division of lobour on globol economic octivilies.2. Analyse the irnpoct of new technologies on work.

The 'Old' Internotionol Division of Lobour

The old spoliol potlern of speciolisoiion is one in which industriolised couniriesproduced monufoctured goods ond ihe non-indusfriolised counlries supplied row

moieriols ond ogriculturol products io the industriolised countries ond oc-fed os o

norkei for some monufocfured goods. Such geogrophicol speciolisotion - sirucluredoround o core ond o periphery - formed ihe underlying bosis of much of the world's

trode for mony yeors (Fig. 8).

' Materials etc. periphery' core source of raw mate.ials andProduction of foodstuffs. Market formanufactured goods manufactured goods

.r*X&EqKw&*x,,. Manufactures

/t4ust know con

New rnternotionol division of lobour Multi skilled production(NIDL) Produciion chojn

Globol shift Rotionolisotion

Comporqfive odvontoge Orgonisotion ond ini€grofionInlernqtionolisoiion ond speciolisofion of Deskillingeconomic octivities DeindustriolisotionJob speciolisofion Re-skilling

Flexible productron Re-industrrolrsotion

Fi9.8: The 'pre-globol' or old int€rholionol division of lobour

This relotively simple pottern (olthough it wos never guiie os simple s thedescription obove suggesis) no longet opplies. During the post 50 yeors, in

pqrticulor trode flows hove become fqr more complex.

The New Internotionol Division of Lobour (NIDL)

The new internotionol division of lobour (NIDL) is o tronsformotion of the old

geogrophicol pottern of speciolasotion. The NIDL divides production into differcnlskills ond tosks ihoi ore spreod ocross regions snd couniries roiher thon wilhin q

single compony.

The stroightforword exchonge 5etween cote ond peripherol oreos, bosed upon o

brood division of lobour, hos been tronsformed into o highly complex siructure. fihos involved the frqgnenfation of mony produclion processes ond theirgeographicdl relocation on o globol scole lhot cuts through notionol boundories. Inoddition, new centtes of industriol produclion hove emerged in ihe so-colled newly-industriqlised economies (NIEs).

Increosingly, os distonce ond tronsporl costs become less importont, lqbourrequirenenis of induslry ploy o strong influence on the locolion or exPonsion ofindustry. Different oc-tivaties within on induslry or compony ore seen to hove

different lobour requiremenfs. Hence, the New fniernolionol Division of Lqbour(NIDL) is understood to meon ihe spreod ol diflerent stoges of nqnufocluring iolocotions in dafferent countties, to exploit diflerences in fqcior cosis ond

economies of scole.

From the 1970s onwcrds hitherto ogriculturol countries, poriiculorly in the Asio-

Pocific region, become ropidly drown info the new internotionol division of lobour os

key production functions were shifted owoy from the old industriol zones ond theAsion countrjes, especiolly, ossume key roles in cefiain induslries. Hence, the NfDLis qn emetgent form of worldwide division of lobour ossocioled with fheintemdtionalisalion of production and the spreod of industriolisoiion.

Couses of NrDLThe rise of NIDL is reloied to chonging comporotive qdvqntqge enloyed by DCs ond

LDCs. The concepi of conparative advontage s\ggests ihoi differeni regions will

speciolise in producing Jhose goods ond services for which eoch is best endowed.

Simply put, if eoch region or country speciolises in those econornic octivities ihey

perform relofively better thon other, ond imports those 9ood5 lhot ofher countriesproduce more cheoply and efficiently, everyone is likely to goin.

Thus, lobour-intensive production of components will be situoied in low-woge oreos,while the production of high-technology ond high vslue-odded poris will require o

skilled or well-educoled workforce. TNCs ore investing overseos porticulorly in low

incone couniries fo toke odvonioge of morket occess, cheop lobour, lock ofregulotion (such os rules concerning the environment), lox breoks, or occess to row

mqteriols, whilst sinultoneously closing plonts in high income countries.

In ihis woy the success of the NIE5 now meons thot they qre investors in the lowen

income countries of South ond Eost Asio. They ore losing their lower skilled, monuol

jobs to economies such os Bonglodesh ond Chinq. An exomple of fhis is Nike wherethere hos been o decline in lhe production of trqiners in South Koreo, which is osuccessful NIC, ond the increosed produciion in Chino whete the woges ore much

lower. The globol shift in the locqtion of nonufqcturing production hos coused o

chonge in lhe spofiol division of lobour omong countries, which become known os theNew Internotionol Davision of Lqbour (NIDL).

Impoct (Consequences) of NIDL

Impoct of NfDL in the DCs

i Deindustriolisotion in ihe DCs

A consequence of lhe internotionol division of lobour in the developed world is fhedecline of importonce of monufocturing, qlso known os deindustriolisotion.

Deindustriqlisqiion tefets to a foll in the contribufion mode by the nonufociuringsector lo notionql output, employment ond income. It is o long-tern process ofstructurol chonge in cn economy - leoding to o chonge in composition of notionol

output, ond qlterqtions in the structure of the lobour norket. Deindus iriqliso tionhos recently hod o brooder meoning to include the increosing displocemeni ofnonufcciuring by service octivilies an the economy.

However, the process of deindustriolizotion is not uniform qcross the whole ronge

of monufocturing. ft tends to be both region ond indusiry selective.

Ihe greolesl losses iniliolly occurred in the stople industries, such qs iron ond

sleel, heovy engineeting, shipbuilding ond texiiles, odversely olfecting olderandusfriol oreos whete these industries were most heovily conceniroted. Closures in

these indusiries come ot o iime when cool-mining wos olso declining in o number of'these regions.

As o whole, DCs shore of monufocturing hos follen significontly over the yeors. Ilhos been o chorocferistic of DCs for mony yeors. After !966, growlh in

monufocturing employment slowed down. Following thot, 6e'rween 1973 ond 1983,

monufocluring ernployment went into decline oi 3% per onnum.

From the 1950s lo 197Os lhe most importont spqliql shift in monufocturing on o

globol scqle wss the emetgence of Jopon os one of the world's leoding

mqnufqcturing countries vying with the UsA os world economic superpower. Mostodyersely affected were countries ol Westen Europe, poriiculorly ihe UK ond theU5A. Their shore of world monufocturing outpul ond frqde in monufociured goods

fell, fron 4O.3% (1963) to ?4.9% (1994) for lhe USA ond fron 6.5% (1963) to 3.8%

(1994) folthe UK.

Since the 1970s NIE5, especiolly those of Souih Eost Asio, Brozil ond Mexico hqve

become increosingly importont. Wl\ile these NfEs or€ toking on increosing shore ofworld nonufocturing output, o significont omount of this cqn be seen os on

extension of monufocturing in MEDCs, since if represenfs direct foreign investmentby TNCS bosed in MEDCs. For economic reosons fhese TNCs hove chosen totronsplont some stoges of production process to lhe developing couniries.

Reosons folthe decline of monufoclurino in DCs

o. Loss of compeiitivenessEorlier declines offecting nonufociuting wete moinly ottributed to declining

compeliiiveness in lhe foce of newer producing counlries. For older sfopleindustries in MEDCs, cosls were relatively high due to unecononic locqtions qnd

growing diseconomies ossocioted with outdoied foctories ond mochinery, higherlobour costs ond restrictive prqciices compored to the newer producing

countries

In some coses costs of power ond row moteriols were olso higher os the olderproducing counfries confinued to rely on coolfields ond mines which werebecoming exhousted ond costly to work.

b. /t{ore ropid exponsion of lhe service sectorservices were replqcing mcnufocturing os fhe engine gf the economy in MEDCs.

This represents a slage of economic moturify qnd developmenl of o country.The structurql tronsition of on economy from one dorninoted by industriol

production to one dominqted hy lhe service sector is o nqfurol feoture ofeconomic development.

As the economy mofures, there ore shifts in fhe pottern of demond towords

services where the income elosficity of demond is higher ond where reloliveprices ond profitobility is highet. Scsrce economic resources tend to flow where

fhe potentiol rotes of return ore higher. This represents o long term shift in

globol comporotive odvonfoge.

c. Technologicol chonge

Deindustriolisqtion is qlso due to technologicol progress. Improved methods ofproduclion leod to higher outpul wilh fewer workers being needed os jobs ore

ioken over by rnqchines. The use of robots for welding ond Poinf-sProying in cor

monufocturing is on exomple.

fn sun, ropid increose in outomotion ond computer confrol of production lines

logether with industriql robots drosticolly reduces fhe demond for lobour, thus

fewer jobs in the monufocturing sector. Job losses hqve been greotesf omongst

unskilled lobour since if is ihe tosks performed by unskilled lobour which con

most reodily be outomoied.

d. Internqiionolisqlion of productionTrqnsfer of production io low cost oreos in the ELDCs, is mqde possible by

improvement in ironsport ond communicoiion technology. This refers to thefilter-down of nonufocturing industry from developed countries to lower woge

economies, such os those of Southeqst Asia. fhe filter-down process refers themovemenl of troditionol induslries from high cost MEDCS io LEDCS where

woges ond other cost foctors qre lower.

rf other couniries ore qble to develop lheir own production odvonloge, for e.9.

exploitinq economies of scole or by increosed investment in resesrch ond

developmenl, then overseos producers would be oble io sell lheir ouiput ot o

lower reloiive price. This would couse consuners in the home country to swifch

to cheoper externolly supplied good. Hence, the closure of inefficient plonts

Cose stody of deindustriolisotion: The UK

An exomple of qn economy experiencing deindustriolizqfion both in relofive ond in

obsolute terms is the UK. Deindusfriolizqfion hos been concentroted in the UK's

19rh century industriol cities such os Tyneside, Strofhclyde ond Sheffield oll ofwhich lost more thon 20% of their monufocturing bose beiween 1973 ond 1983.

5,nce 1990, monufocturing in UK hqs follen into technicol recession 3 times (defined

ds o fine period of 2 suc.essive quqrfers when ouiput foll. The shqre of tofol 6DP

tqken by monufoc turing hos declined frorn 19% in 1988 lo 14.5% in 2OOO (Fig. 9).

Manufacturinq Share of th€ Economy:

1S

16

12

a

2

Fig. 9: Folling shor€ of hohufocturihg in totol notionol oulput (6DP)

The proporlaon of workers employed in mqnufocturing hos follen from oroond 40%

oi the beginninq of the 2O1\ cenlury 1o borely hqlf ihoi now (Fig. 10).

1a.6Va

Manufact!rin9 Share of the Workforce19AO-2003

--.-:.-:.....--.

10r Follinq shore of industriol employment

. Restructuring ond rotionolisotion ir the DCs

The increosing level of globcl compeiition hos driven oll induslries to improve theirproductivity. The conseguences in MEDCs hove generolly beenr

. Restructuring by

> Introducing new iechniques ond hoving o betfer control of processes leoding

to cost-sqvings, for instonce, more efficienl use of energy supplies ond row

moteriqls ond better quolily controls leoding fo less wosle ond o higherstqndqrd of producl.

> chonging the industriol orgonisotion through mergers, tokeovers ond

colloborotion between componies

. Rotionolisotion or 'downsizing' of lhe workforce with the expectotion thqt q

smoller number of workers will rnqintqin the some level of production. For e.g.

Unilever's ioilet soop monufocturing bose wqs rotionolised from 13 focloriesdown lo four between 1973 ond 1989.

Rqtionolisdiioh is defined os lhe oitempi lo inqeose productivity ond

cornpeiitiveness by cuiting down on redundqnf work processes ond closing

inefficient, unproduclive operqtions. One woy for on industry to rolionolize is toqdopi mechonizotion. Economies of scole con olso be ochieved 6y creoring largerplonts, i.e. omolgomoting smoll plonis into lorger ones.

Wifh restructuring ond rotionolisoiion, increoses in productivity took place. The

opplicotion of technology to moke nore efficienl use of enetgy supplies ond row

moieriols, os well qs better quoliiy control, hos ollowed some oiling industries tosurvive ond compete with lesser cost locotions. Some hove reduced the number offoctories by infeqroting diffetenl processes or cutting bock on pnoduction in theloce of decreosing demonds (restructuring) e.g. the Briiish sieel corporolionreduced its plonts to 5 integrated plonts in the 1970s to cui costs ond implenent

more produciive processes.

As such, ihere is still o conlinued dominonce of DCs in monufocturing.

iii. Reindustriolisotion: growth of high-technology nonufocturing octivities

Another reqson for Dcs still dominoting world monufociuring produclion is due to'the growth of high-iechnology monufocfuring qctivities. After o period ofdeindustriolizotion, monufocturing moy be "re-born" wifh ihe growth of hi-.tech

industries such qs electronics. This is colled reindustriolizolion. By definilion,reindustriolizolion is the developrnent of new indusiries which hqs followeddeindustriolizoiion in mony regions of the developed world.

The electronics industry ond bio-technology industry hove formed the bockbone ofwhot is known os the new industriol revolution. These ore high-volue-oddedqciivities with specific locqfionol requirements, which include:. Skilled ond well-quolified lobour for scientific reseorch ond development. Well-developedcomnunicoiionsnelwork. 600d soentific infrostructure. Advonced mcrkets for business ond informotion services (high income

consuners)

The indusiry requirements compel such industries to locote in the MEDCS. Inoddition, lhere is o high lendency for ihem io ogglomeroie(concentrotion/clustering of production qctivities ond peoPle for mutuol odvontoge).

The new industries ore locoled in the technopoles ond science porks in pleosonl

environmenis within ond in the rurol surroundings of lorge conurbofions ond in'sunbeli' regions. Becouse of the comporofive odvqntcge the DCs hove over theNIEs or LDCs in these new industries, i1 is these industries which ore seen os vi-tol

to the future economic well-being of DCs.

The growth of high-lechnology monufocturing is olso reloted to stole economic

policies io direcl investrnent into less developed qreos e.g. Scotlond Glen. However,

there ore increosing tenden ies lowords in-ternotionolisofion of high technology

ossembly or production to NIES e.9. Toiwon hos been o

conductor production. Molor bio-fechnology firm, e.g.

6loxoSnithKline, hove clso shifted produciion to Singopore.

populor site for semi-

Wyelh, Pfizer ond

Cose Study: Re-industriolisotion in Scotlond

. Seyere deindustriolisotion in the mid-201h cenluty of engineering ond ship-building> E.9. Rosyih Novol Dockyord in Fife> 1988 - 6000 employees> 1994 - 3600 employees> 2005 - 22OO employees

. In 1996,€1000 million wos invesfed in Scotlond by the U5, EU ond Eqst Asio(Foreign Direct Investment)

. 75% of the investrnent wqs into elecfronics especiolly in semi-conduc-iors ond

consumer exports such os Pcs.. Investors were ottrocted by:

> Strong morketing of oreo by "Locole in Scotlond", o development ogency setup in 1981.

> Existing clusier of smoll electronics componies in centrol Scotlond> Quoliiy workforce> Regionql grqnts

. The outcome: 35% of oll bronded PCs (e.9. IBM, Compog) in Europe ore now

produced in Sco tlqnd. Cteotion of Silicon 6len, home of hi-iech industries in Scotlond. Eleclronics occount for 49% ol Scotiish exporis. Employs 55,000. Dqvid Keeble (1989) ideniified 3 key oreos of industriol growth which mode re-

industriolisof ion possiblei> Smoll f irms> High technology induslries> Tertiorisotion - this includes tourism ond producer services (finonce,

bonking, insuronce, mqrkeiing, odve[tising)

/t^ust reod: Geo Foctsheet - 'Structurol Chonge in the Ruhr', o cose study on

deindustriolizotion ond reindustriolizotion in 6ermqny.

Inpoct of NIDL in lhe LDCS

i. Indusiriolisotion ih LEDCS

LEDCs os q whole increqsed thein shore ofthe eorly 1950s to 23% 6y the loie 1990s.grows due to the development ofindustriolizofioh

world monufocturing output frorn 5% in

This process where o counlry's economy

monufocturing industries is colled

.

t,

The crilicol focior influencing growth in LDCS is Foreign Direct Investmeni (FDI).FDf refers 10 investment of foreign ossets into domestic structures, equipmeni,ond orgonizotions. Mosf FDI is from investrnents by TNcs bosed in North Americo,Europe, Jopon, ond Eqst Asio. Invesfments by TNCS in LDCs usuolly occur for.tworeosonsi. to setve lhe loccl morket. exploit cheoper resources like lobour ond mqteriol.

Fo the vost mojority of LEDCs, however, monufocluring remoins insignificqnt. If is

in the Newly Industriolized Economies (NIEs) thor industriol growths beconefovoroble.

Increosed levels of development. Growth of rnqnufocturing industries increoses-the income of o country. Monufqcfuring workers enjoy higher woges, enobling them to pursue o higher

stqndord of living. E.g. South Koreo experienced high rotes of growth, sometimes exceeding

10% par onnum in the 1980s ond 1990s. Woges increosed ond virtuolly ollospects of life improved. For instonce, life expecloncy increased from 47yeorc in 1955 to 75 years in 2OO2.

Feninizotion of lhe workploce. Feminizoiion of the workforce refers to lhe dromqiic increose of women's

porticipotion in vorious oreos of poid enployment. Feminisotion of theworkforce qlso links io globolizotion, os the chonging employmentchqrocterisfics meons thot mony more women ore in the workforce, but oremostly employed in the low-skilled, low-poid, insecure positions.

. Mqny firms (especiolly textile/ossem5le industries) who relocoie or set up

foclories in EPZ/ SEZ in LDCs often enploy femole workers.. Similorly in DCs, where newly-creqfed terfiory jobs ore filled by femoles

insteod of moles

. Mony firms (especiolly texlile/ossemble andustries) who relocole or sel up

foctories in EPZ/ SEZ in LDCs often emPloy fenole workers.. Similqrly in Dcs, where newly-creoted teriiory jobs ore filled by femoles

insfeod of moles

iv. Lobour exploitotion in LEDCs. The growfh of monufociuring or ossembly plonts in LDcs hos resulled in o

ronge of exploitotive lobour prociices.. Workers are frcgue tly required fo work long hours without res.t to fulfill

production guotos.. In oddition, there hove been instonces of sexuol horqssment by rnole

supervisors towords f emqle workers.. Such oppressive working conditions hove led some to tefet lo produclion

plonls os'swecfshops'. Some internolaonol brond ncmes ihot ore known to use

'sweofshops'in their production ore Nike,6op ond Levi's.. fn ofher oreos, child lobour is often enployed in mony foctories ocross LDCs.

Sone of ihese children moy be involved in dongerous work such os polishing

diomonds, moking motches qnd fireworks, etc.. The use of child lobour is porticulorly widespreod in Bonglodesh, where 60%

of the gorments ore destined for USA.. In sone of these foctories, children ore forced to stitch under poor lighling

condilions, leoding to long-term deleriorotion of their eyesaght.

v. Increqse of urbon problems in LDCS

. Mony rurol folks, including women, flocked to the fociories looking for jobs.

Out of mqny, perhops only o few were employed. yet, the rest choose not toreturn to their villoges ond choose io sioy in the city, sometimes employed in

undesiroble occupofions. Some of these workers moy eventuolly migrote toDcs in seorch for an even betler lif e.

. Increose in rurol-urbon migrotion often puls o siroin on the infrqsfruciureond public service provision.

. Increqse in urbon populolion due to rurol-urbon migrotion olso toxes o

government's obility to provide for housing. This hos led to the growth ofslums ond squolter settlements in mony cities in the LDCs.

. E.9. qlong the Rio 6ronde Volley, indusiriol growth ond urbonisotion hove led

to ocute shortoges of housing ond wofer. Mony naquilodora workers live insquolid shonty towns, without power or woter, surrounding ihe focfory cities.A naquilodord is on ossembly Plonl in Mexico (neor the Uniied Sfoiesborder)i pdrts ore shipped into Mexico ond the finished Product is shipped

bock ocross the border. Moquilodoros ore quite Prevqlent in Mexicon cifies

vi. Environmentoldegrodotion. Environmentql, heolth ond sofety reguloiions ore weoker in LDCS thon in DCs

ond ore frequently ignored. Mony LDCs ore willing to compromise on lheirenvironmentol record in lheir eogerness to develop iheir economy. This

freguently results in environmentol degrodotion cqused by industrioloctivities

Whot is the Globol Shift?

The globol shift is the movemenf of econornic octivity fron Dcs initiolly to Nfcsond more recently to LDCS (especiqlly in Asio qnd Lqtin Americo). Iniiiolly in the1960s this wos q novement of rnqnufocturing qctivity, but since ihe 1990s. serviceoctivity hos been involved. In most cqses it is o relotive shifi, os economic octivityexponds overoll, buf in some cqses economic octivity in MEDCs is in obsolute decline.

The Rise of the NIEs

Industriolisotion in NIES is olso offen driven 6y foreign direct investment (FDI).Bulk of FDI is concentroted in o hondful of countries with Chino being mojorrecipienis in ihe lcfe 1990s.

FDf from DCs ptefet to set up plonts in NIEs for vorious reosons. In some NIES,industriqlizqtion qlso occurs due to fhe gnowth of home grown firms e.9. the SouthKorean chaebols.

Chorocteristics of NIEsAn NIE is chorqcterised byi. An increosing shore of lhe world mqnufqcturing outpui. Significqnt growth in mqnufocturing production / 6DP. Increosing proportion of lhe worklorce in monufocturing indBtries. Significont growth in expori of monufoctured goods

6roups of NIEsThree generotions of Asion NICs hove been identified:-

I'r generotion NIEse.g. Singapote, Taiwon, Souih Koreo

Ropid industriqlisotion during the post wor re-building period frcm 1945 - !97Os

2nd qeneroiion NfEse.9. Thoilond, MoloysioRqpid indusirialisotion during the 197Os - 199Os, stimuloted by the growth of the1'r generoiion NfEs

3'd generotion NfEse.9. fndio, Chino

Likely lo 6e lhe corc of globol economy in the 21'r century

Two other geogrophicol groups of NfEs olso idenlified. Lotin Americq NIES - Erozil, Mexico. Europeon NIEs - Greece, Spoin

Stoges in the etnergence of NIESfage I Trodilional society

Associoted with coloniol rule or economies of lhe leosf developed countries.. Simple processing of locol row moleriols with mosily lobour ond minimum

techhology input. No or very low volue odded.. E.g.Export of conned fruits ond juice.

Stage 2 Inporf Substilufion fndusfnes. Moke locolly whot hod been previously imported. Achieve through pricing out imports (through toriffs) or even tesltict

imports. Necessory to profecl infqnt industry ond shelter them from foreign

cornpetition. Notionqlistic mentolity - be self sufficient, do noi wont to be dependeni on

imports. Associoted with Stqfe Enierprises, Quosi - government firms ond joint

venture with lorge TNcs. E.9.Food processing in Singopore in lhe 1960s, Cor ossembly in Moloysio in

the 1990s

Slage 3 Exporl-oriented industries. Focus on exporiing product to EMDC morkets like ihe USA. Allows for significonf foreign involvenent in domestic morket. Associoted wilh octive pqriicipotion of TNCs

l"lod€l ol 3tages h lh€ edergenc€ ol ! Newly lndusl.lall3€d Economy (NlE)

Srag6 r ?adirioflal socloty

Labour inlensivs industri8s, lo\! levelsol recn.ology. Loc€l law matedals -food p.oc€ssing and lsxliles common.

Stage 2 hpo.l subslilulbn in

nedsclion ol expenslve impodB byd€velopmenl ol home lndusldes.Protedionist paliclss, s.g. hlgh lradelanfs on manutact!€d good3 and car

srse€ 3 E:!919!!rE!!.!gsl!s.jE9l:)Hlgh-r€cnnobgy, c€pllal inl€nslv€lndustrios. a & D tunctons. Rapidgrowth and dev€lopm€nt

Reosons for econonic success of NIEs (porticulorly the Edst Asion economies)

1. Lobour> Lower lobour cosfs

. Provide fhe cheop lqbour desired by nony Western rnvestors (ofter focingropidly rising woges ot home)

> Literocy level of lobour. Populoiion generolly educofed. Literocy rote in generol is obout lwice petcentoge poinl of Africon countries. Skilled lobour force. Toiwonese qnd Koreon hod working experience in the Joponese Industries. Hong Kong ond Singoporeons hod iroining in odminislrotion in the civil service

os well os skills obtqined from working under ihe British

> Lobour orgqnisqtion. Curtoiled in Singopore ond chino in the Speciol Economic Zonestqs labour

orgonisotion might leod to rioiing ond loss of productive mqn hours, moking iiunprof itoble f or f oreign investment

2. Role of government> Governmenr involve in the seleclion ond development of cerloin indusiries.> committed 10 develop humon resource by improving educolion qnd vocqtionql

lroining. In Soulheqst Asio, countries such os Moloysio, Singopore ond Toiwon hove

broughi populotion under control ond emborked on educotionol progrommes

with the iniention of roising the genetol level of skills omongsi lobour ond'through higher educotion ond reseorch progrommes

> Setling up Export ProcessingZones (EPZs) or Speciol Economic Zones (sEzs). speciol concessions ore provided, such os the import of goods ond mqteriol

on o dufy-free bosis. Infroslruclure ond services needed for monufocJuring ore provided. Resfriciions on ihe proporlion of foreign ownership of qssets which moy be

ollowed ore woived. Strong odvocotor of trode ond export.

L A Special Economic Zone (SEZ) is a geographica rcgion that has economic laws different froma coLrntry's typicaleconornic laws. lJsually the goal is an increase in foreign investment.

3. Geogrophicol Foctors> Advsntageous geogrophicol locotion

. E.9. singopore is siiuoted to chonnel ttode between the Indion ond Pocificoceons, ond ils centrol locoiion hos fociliioied its development os o tnojorf inonciol, commerciol ond odminisirolive-monogeriol centre.

Morket & trodeSome NIES qre highly populous ond this provides q lqrge qnd reody morkei forfirms.In ihe lqte 1990s, qs Chinq's growth begqn to expetience more substoniiolgrowth, mony outomobile producers were eoget lo form portnerships withChinese ouiomobile producers to goin occess lo lhe bourgeoning morkei.

4.

Sicrtress oi cncr(y and resource bnsc

E I China, lndia and arlrirlarcurc! U/godddoncsric enrrE mno.a rnd agiicu;turnlDrdilcrs baso ln conrr.sr, somecounlragnrvr h.d ro rcrf on rmDo:t ng much cl enerrJ,

Gorrrnmenl pollcies rnd aallons$rhire in?ard o.ienrei policirs ray Erorrlialerp.ns on oi f,rn!lac(!rin8. conlinleC

rleveloJrDeni i5 deFgndeit !n 6cre owlar!o.enFd p:licies and a no/r lo a rnarhel:ojiented .!proadh. 6c{€rnienl parLir:iFarionan. nr{rlenLion ar! also ice as lilal. Th!/Ecd rD cr{nte a budg! 3urpus lo protd!caJJilalbr iie!srmon1 byconr/r) ling culJlcciFrncirlr., I aron a.d pub

'c dcor drecl

llr. rien: BL ol imlorred copiro toin?asnnenr ln ilraslJucturo !n'l oroduclilen.nf,lad(u:ni: orollde incc.tlrcs ior h'r inir!esxrenr liberall$e rr.do rid iiuricesbrc$ in rk l5 edu;alon: rrolidc politi.rlsral it! znd be r€adylo Fursle si,!.iu.arr.ed;u5iment5 to sult chanded ciicumsrances

€cotramic condltlonsAdeq!?tc llnonciar ana drnrr i.lrasrrucl!re.nse in reall.con.s |o e.larle mnrket ?niinc€nsed DroDemrq lo s3!e to pFrdeFiveie caril6, i.cre.sed

'f!estmenl in

roserch end deElonmeni tq adv.nc: homcg:crr r.ihnol.g! prom o1e 5 l6vnur.bl!lrl.ge! bctv&n sectors

[rDansion and

Ext€rnal factors

Ihir llows irom multlnitlo.a co.Ocrstioi!i. esiablisrin8 bGnch D;fls .i3 rndlorrs from lnlernili.nil atencies andrr.dl( lrom rdmft.rclai hank5 and rii!.:t

Tr3ding conditlonsTcrms ollrad3 in rniation 10 oiports €ndirlports i.om tjereloFlnE colnire! needra be dersirni.e.!. Exlenl oili'ill a.dii\psrr !uc.lar aga'rjsl Eoods and produ.etofr devel.! n! ceunirie5 and tne erienlo/::ade lbera iraton under lhe GAITiol.y shoud.lso be declded Stacnas[.or !nrxpccrod hipFcninds Jlle.r rrcrLc:rading condniois 3id .arEnaleconom es €,9. rhc olrshcck o! 197:l;nd inslabll 1y ol nteroarional cutre.cie5;re rdil.rl ln lhe s,rdnen rlse in r;lxc nlixe.JnFarere fen igiinsi lhe dot;r,

Technolot] transfe.

^- Pa.[ides fron nul:i.ahonar coroo,Er o t

-

are h!-drred n r inls. Tecnnarou.,rr r,{is {iven bf inlern6lr!.nr a6enc es

il0Nlcmbership ol reglonal blocsireio mo? Pir,'{. ft. mar;(e11orfiaa!l€crurod g.ods .fd in.rersecooPeruli0n betrrD4n r€Ftercounlries e,r:. tler ca s0embe.shiD ol N,lFilr dnd Td:83n,Srrih Korea Si.,[nFo'e

l

I

controlin BrF(h dnd increased

Keys to deytlopmcnt oi tlie mn ,tfactutittt s(Lar in nex./y in.irstrialiJinj corniries

Impoct of New Technoloqies on Work

i. From job speciolisotion to flexible produclionProduction processes hove become more finely divided (greoter speciolisotion) so

thot woste is minimised ond toiol produciion cost is decreosed. As o result,processes ore becoming more stondordized ond routinised so thot semi-/un-skilledlqbour con mqnqge. For e.9. the losk of shoe ossembly hos been broken down iniohighly speciolised gluing ond slilching losks, enobling Nike to shift such jobs oroundLDCs in seorch for the cheopest lobour.

At the some iime, firms hove turned to compuier technology ond outomotion toreduce lobour costs ond increose efficiency os 1 robot con generolly pefiotm thetosk of of leost 2 people.

The prevolence of computer technology ond outomolion is indicoted by the sole ofindustriol robots, which exceeded 1 million in 2000.

In the post, oi the level of the workploce, Fordism is ossocialed wilh fhe intensive,outomqled production techniques thot spreqd lhroughout induslry from lhe 1920s -notobly the qssembly line qnd wiih fhe specific forms of work ond industriolrelotions ihoi developed oround these ptocesses. At the le\el of economy, Fordismcon be thought of os ihe btinging logethet of moss production wiih mqss

consumption, which delivered susioined growth, noiobly in ihe lhtee decsdes aflett945.

The crisis of Fordisn followed bofh the foilure of Fordist production methods 1o

deliver susiojned producfivity goins, ond olso the foilure of Fordisl economic

monogement. Key foctors includer-. The globolisolion of production ond finonce,. Domesiic morket soturotion cnd. chonging consumer detnonds.

This triggered o shift into flexible production ot posf-Fordisn.

Amongst ihe first evidence of o new produciion porodigm come from north-eoslernfioly in the l97js. Aerc, in controsi wilh the older industriolised regions, smoll

fitms were orgonising os coopeTofive networks of subcontroclors- The workprocess, divided qnd de-skilled by Toylorism, oppeorcd to be rcintegrcled. And thefocus wos on'flexible speciolisqtion' in response to chqnging consuner or nqrketdemond. 5ubsequently, vqrious inifiqfives such os off-shorin9, just-in-fineproducfion ond fhe growth of o peripherol workforce have 6een seen os sympiomsof o more widespreod trend.

ii. FlexibleproductionThe post-Fordist petiod, then, sow the odoption of new production methods, new

forns of indusfriol orgonisolion, ond o redefinition of work qnd monogeriol control.Niche production for diversified morkets, il is orgued, begqn to reploce the moss

production for siondordised products.

Flexibiliiy in 3 oreos is of importonce in flexible production:. Flexibility in the produclion process. Flexibility in the orgonisotion of the production process wilhin the foctory;

ond. Flexibilily in the orgqnisqtion of relqiionships between cuslomer ond supplier

firrns.

Mony different nomes ond models hove resultedr just-in-iime producfion, leon

production, Toyo tism, f lexible occumulotion, f lexible speciolisotion.

Box 1 shows lhe dilferences between lhe old working ptoctices/ produclion

methods (Fordist) ond the new workinq prqctices/ production melhods (flexibleproduction).

BOX I

A} THE OLD PRODUCTION METHOD

Fordism and Mass Production - the assembly line technique

ln the past, the production chain used to be organised along an assembly line in a largefactory known as Fordist production. The Fordist model is cost driven. Here attention ispaid to increasing productivity levels, lowering costs and reducing human intervention.Labour was replaced by machines, but at the expense of increased specialisation andreduced flexibility.

Features / Characteristics of Fordism

. lvlass production of standardized goods on large-scale assembly line

. Big iactories, large inventory

. Emphasis on cost-minimization

. Horizontally and vertically-integrated firms, usually multinational corporations

. Strongly hierarchical and demarcated employment structure

. Taylorized labour structure

. lniernal Division of Labour

Fordism and industrial location

Fordism place emphasis on economies of scale and as such, encourages the growth oflarge industrial plants and regions which concentrate in certain products. With suchclustering of activities, savings or benefits are derived.

(B) THE NEW PRODUCTION METHOD

Flexible Production (Specialisation)

Flexible machinesThese significantly reduce the cost penalty for short production runs and batchesbecause flexible machines such as robots and computer numerically conirolled (CNC)machine tools can be quickly reprogrammed to produce a variety of new products.

Computer Control such as CAD - Computer Aided Design and CAIVI - Computer AidedManufacturing has changed the way factories are run. This especially applies to car &wafer chips (basically high value-added) where eveMhing from design to manufacturingand packing are automated.

Use of CAD CAIVI has drastically reduced the time required for planning, design andproduction of a given product. On the shop floor, the flows, inventories and cost ofmateials can be monitored and the use ot more sophisticated robotics means thatproduction can be geared to the market.

Flexible specialisation and integrationThis describes the ability of firms to respond to fluctuations in market demand and toadopt new products quickly. This is in part dependent on their use of flexible machines,but also involves both workers performing a variety of tasks and firms making a greateruse of overtime, part-time employment and temporary workers.

Flexible accumulation - JUST-lN-TIME (JlT)A new regime of capital accumulation through neo-fordist methods. lncrease use ofsubcontracting and the formation of flexible strategic alliances. The changes implied in

flexible production not only affect the running of a firm but also its relationship with itssuppliers.

The essence of JIT is reduction of stored parts by affanging the provision of parts whenthey are needed to go into the parent item, with delivery on the same day or even everyhour. Early attempts at JIT merely transfeffed the burden of stoing parts from the majormanufacturers to their suppliers. What effectively should happen with JIT is synthesisedmanufacturing, where JIT extends all the way along the supply chain, ensuring eachlevel caries lower stock.

JIT has a number of key requirements:. Geographic concentration - short disiance between supplier & consumerc for

rapid delivery. Zero defects - no time to re-order, all parts must fulfil strict quality demands. Supplier network - the number of suppliers should be small and they should be

under long-term contracts. Shared research - there should be a transfer of technology and a research

collaboration between production plants and their suppliers. Dependable workforce - industrial action which delay or prevent delivery must be

avoided

Fiq. 11 | 6rophic representotioh of the leon production systeh

Waste reduction

Production cost reduction

Nlanufacturing c)€le reduction

Labor reduction

lnventory reduction

Production capacity increase

75% 100%

Fig. 12r Beh€fits of the leon produclion systeh

iii . /t^uhi-skilled produclionMulti-skilling is where q lobour orgonisotion is structured so thql workers possess o

ronge of skills oppropriole for use wilhin the orgonisqtion

A multi-skilled worker is therefore on individuol who possesses or ocquires o ronge

of skills ond knowledge ond opplies them to work losks thot moy foll outside thetrodiiionol boundories of his or her origincl troining. Some of the reosons for theintroduclion of multiskilling include:

. To increqse lobour productivity

. Cotet to the declining number of trodespeople ond cqter for o criticol skillShortoge

. Cteote o more flexible lobour force oble to meet chollenges, improve projeclperformonce ond better utilise the currenf pool of skilled workers

. To utilise lobour so thqt workers possess o ronge of skills suitoble for more thonone work proceSS

. Develop competency within the wotklotce ond ollow full deployment ofquolif icotions ocross the industry

Problems thot offeci mulii-skilling ore both bosic ond procticol. Bqsic problems oredifficult lo overcome qnd include limits on humon skill retenlion ond ihe difficultyof moinloining o multi-skilled workforce from o monogement ond finonciol viewpoini.

Procficol inpedimenis include ihe orgonisotionol requirenents, produciion

monogemeni siructure, resistonce to chonge, guolificqtions reguirements ond theoccepionce of mulli-skilling in both union ond non-union work siies.

iv. Horne working. Telemobility qllow for nore people io work from home.. E.9. Jetblue Airwoys'reservolion stoffs ore mode up of housewives working

from iheir homes in Uioh.

v. De-skilling (on elfect of specidlisotion ond outomotion)Deskilling is the process by which skilled lobour within on industry or econony is

eliminoted by fhe introduction of technologies operoted by semiskilled or unskilledworkers. Work is frogmenled, ond individuols lose Jhe integroted skills ond

comprehensive knowledge of the crqf ts persons.

Exomples include CNC (computer numericol conlrol is o compuier "controller" thotreod commonds ond drives o mochine tool), mochine tools replocing mochinists ond

ossembly line workers replqcing oriisons ond croftsmen.

vi. Decline in employmeni qs rnqchines ore used io reploce humon lqbourIn lroditionql indusfries, computerisoiion leods lo lhe replocenent of workers.Where workers ore retained, they ote reduced to mere mochine supervisors-

vii. Re-skillingWilh flexible producfion, there is the possibiliiy of re-skilling the worker. This isbecouse the worker no longer focuses on one specific tosk but insteod is skilled in q

voriety of tqsks. Furthermore, os ihe workers ote trained io monoge fheir own

tosks ond schedule, other monogemen.t skills like interpersonol skills qnd timemonogement skills mcy be picked up olong the woy.

viii. Environmentol controls6lobol production ond globol trode couses globol environmeniol problems.

. Firms locote to developing countries, where environmen-tol controls ore more lox,tronsferring pollufion from the developed world to the developing world.

. Monufocturing olso produces environmenfol problems thot tronscend politicol

boundories. E.9. ocid roin produced by energy production is corried by wind

beyond its point of origin lo creote envi.onmentol dqmqge. The domoge to theozone loyer is coused by the use of certoin chemiccls ihoi move upwords in thothe strotosphere, expelling chlorine lhot destroys ozone molecules.

. Depletion of noturol resources resulfing in deseriificoiion in the Sohel (over-

cultivoiion); deforestotion (183km2 of fotest deslroyed every hour - WorldResources Institute)j loss of biodiversity

fn response fo lhese probletns, issues of sustoinoble development hqve oppeored oiseverol levels. As ihe world becomes increosingly conscious of the need to consetve

the environment, firms hove olso moved towords greqter environmeniol-friendlinessin their production. The ideo of environmentol stewordship, corPoroie sustoinobilityond environmenlol entrepreneurship pervodes corporole thinking.

This development is portly oltruistic qnd portly economic. Rising e etgy cosls

compel firms lo be more fuel-efficienf . In oddition, inveslors ore mote keen on

puiting fheir money into environmeniolly friendly set ups os evident by the success

of the Dow Jones Sustoinobility Index'z.

': Dow Jones Sustanrabilily Indexes are the firsi global indexes tracking the financial perfbrmance oftheleading suslainability-driven companies worldwidc. More info on hltpr//ww$.sustainabilitv indcxcs.conr/