3.

New lnlernolionol Division of lobour

Specimen Questions
1. 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.

/t4ust know con

New rnternotionol division of lobour Multi skilled production
(NIDL) Produciion chojn
Globol shift Rotionolisotion
Comporqfive odvontoge Orgonisotion ond ini€grofion
Inlernqtionolisoiion ond speciolisofion of Deskilling
economic octivities Deindustriolisotion
Job speciolisofion Re-skilling
Flexible productron Re-industrrolrsotion

The 'Old' Internotionol Division of Lobour

The old spoliol potlern of speciolisoiion is one in which industriolised couniries

produced 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 - siruclured
oround 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 and
Productionof foodstuffs. Market for
manufactured goods manufactured goods
Manufactures
.r*X&EqKw&*x,,.
Fi9.8: The 'pre-globol' or old int€rholionol division of lobour
This relotively simple pottern (olthough it wos never guiie os simple s the
description 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 differcnl
skills 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. fi
hos involved the frqgnenfation of mony produclion processes ond their
geographicdl relocation on o globol scole lhot cuts through notionol boundories. In
oddition, new centtes of industriol produclion hove emerged in ihe so-colled newly-
industriqlised economies (NIEs).

Increosingly, os distonce ond tronsporl costs become less importont, lqbour

requirenenis of induslry ploy o strong influence on the locolion or exPonsion of
industry. 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 io
locotions 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 the
Asion countrjes, especiolly, ossume key roles in cefiain induslries. Hence, the NfDL
is qn emetgent form of worldwide division of lobour ossocioled with fhe
intemdtionalisalion of production and the spreod of industriolisoiion.

Couses of NrDL
The 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 countries
produce 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 of
regulotion (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 where
there hos been o decline in lhe production of trqiners in South Koreo, which is o
successful 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 the
New 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 fhe
decline of importonce of monufocturing, qlso known os deindustriolisotion.

Deindustriqlisqiion tefets to a foll in the contribufion mode by the nonufociuring

sector lo notionql output, employment ond income. It is o long-tern process of
structurol chonge in cn economy - leoding to o chonge in composition of notionol
output, ond qlterqtions in the structure of the lobour norket. Deindus iriqliso tion
hos recently hod o brooder meoning to include the increosing displocemeni of
nonufcciuring 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 older
andusfriol 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. Il
hos 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. Most
odyersely affected were countries ol Westen Europe, poriiculorly ihe UK ond the
U5A. 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 of
world nonufocturing output, o significont omount of this cqn be seen os on
extension of monufocturing in MEDCs, since if represenfs direct foreign investment
by TNCS bosed in MEDCs. For economic reosons fhese TNCs hove chosen to
tronsplont some stoges of production process to lhe developing couniries.

Reosons folthedecline of monufoclurino in DCs

o. Loss of compeiitiveness
Eorlier declines offecting nonufociuting wete moinly ottributed to declining
compeliiiveness in lhe foce of newer producing counlries. For older sfople
industries in MEDCs, cosls were relatively high due to unecononic locqtions qnd
growing diseconomies ossocioted with outdoied foctories ond mochinery, higher
lobour costs ond restrictive prqciices compored to the newer producing
countries

In some coses costs of

power ond row moteriols were olso higher os the older
producing counfries confinued to rely on coolfields ond mines which were
becoming exhousted ond costly to work.

b. /t{ore ropid exponsion of lhe service sector

services 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 of
economic 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 relolive
prices 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 of
produclion 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 production
Trqnsfer of production io low cost oreos in the ELDCs, is mqde possible by
improvement in ironsport ond communicoiion technology. This refers to the
filter-down of nonufocturing industry from developed countries to lower woge
economies, such os those of Southeqst Asia. fhe filter-down process refers the
movemenl 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 of
which 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:

1a.6Va

1S
16

12

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).
 Manufact!rin9 Share of the Workforce
19AO-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 their
productivity. 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 higher
stqndqrd 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 foclories
down lo four between 1973 ond 1989.

Rqtionolisdiioh isdefined 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 to
qdopi mechonizotion. Economies of scole con olso be ochieved 6y creoring larger
plonts, 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 to
survive ond compete with lesser cost locotions. Some hove reduced the number of
foctories by infeqroting diffetenl processes or cutting bock on pnoduction in the
loce of decreosing demonds (restructuring) e.g. the Briiish sieel corporolion
reduced 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 of
deindustriolizotion, 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 followed
deindustriolizoiion in mony regions of the developed world.

The electronics industry ond bio-technology industry hove formed the bockbone of
whot is known os the new industriol revolution. These ore high-volue-odded
qciivities 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. In

oddition, 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 the
NIEs 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 site for semi-
populor
conductor production. Molor bio-fechnology firm, e.g. Wyelh, Pfizer ond
6loxoSnithKline, hove clso shifted produciion to Singopore.

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 set
up 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 of world monufocturing output frorn 5% in
the eorly 1950s to 23% 6y the loie 1990s. This process where o counlry's economy
grows due to the development of monufocturing industries is colled
industriolizofioh

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.two
reosonsi
. 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 becone
fovoroble.

. 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 oll
ospects of life improved. For instonce, life expecloncy increased from 47
yeorc in 1955 to 75 years in 2OO2.

t, 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 the
workforce qlso links io globolizotion, os the chonging employment
chqrocterisfics meons thot mony more women ore in the workforce, but ore
mostly 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 to
return to their villoges ond choose io sioy in the city, sometimes employed in
undesiroble occupofions. Some of these workers moy eventuolly migrote to
Dcs in seorch for an even betler lif e.
. Increose in rurol-urbon migrotion often puls o siroin on the infrqsfruciure
ond 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 of
slums 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 in
squolid shonty towns, without power or woter, surrounding ihe focfory cities.
A naquilodord is on ossembly Plonl in Mexico (neor the Uniied Sfoies
border)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 lheir
environmentol record in lheir eogerness to develop iheir economy. This
freguently results in environmentol degrodotion cqused by industriol
octivities

Whot is the Globol Shift?

The globol shift is the movemenf of econornic octivity fron Dcs initiolly to Nfcs
ond more recently to LDCS (especiqlly in Asio qnd Lqtin Americo). Iniiiolly in the
1960s this wos q novement of rnqnufocturing qctivity, but since ihe 1990s. service
octivity hos been involved. In most cqses it is o relotive shifi, os economic octivity
exponds 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 mojor
recipienis 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 South
Korean chaebols.

Chorocteristics of NIEs
An 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 NIEs
Three generotions of Asion NICs hove been identified:-

I'r generotion NIEs

e.g. Singapote, Taiwon, Souih Koreo
Ropid industriqlisotion during the post wor re-building period frcm 1945 - !97Os

2nd qeneroiion NfEs

e.9. Thoilond, Moloysio
Rqpid indusirialisotion during the 197Os - 199Os, stimuloted by the growth of the
1'r generoiion NfEs

3'd generotion NfEs

e.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 NIE

Sfage 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\! levels
ol recn.ology. Loc€l law matedals -
food p.oc€ssing and lsxliles common.

Stage 2 hpo.l subslilulbn in

nedsclion ol expenslve impodB by
d€velopmenl ol home lndusldes.
Protedionist paliclss, s.g. hlgh lrade
lanfs 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. Rapid
growth 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 focing
ropidly 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 ii
unprof 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 from
a 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 Pocific
oceons, ond ils centrol locoiion hos fociliioied its development os o tnojor
f inonciol, commerciol ond odminisirolive-monogeriol centre.

4. Morket & trode

Some NIES qre highly populous ond this provides q lqrge qnd reody morkei for
firms.
In ihe lqte 1990s, qs Chinq's growth begqn to expetience more substoniiol
growth, mony outomobile producers were eoget lo form portnerships with
Chinese ouiomobile producers to goin occess lo lhe bourgeoning morkei.

Ext€rnal factors

Sicrtress oi cncr(y and resource bnsc

Ihir llows irom multlnitlo.a co.Ocrstioi!
EI China, lndia and arlrirlarcurc! U/godd i. esiablisrin8 bGnch D;fls .i3 rnd
doncsric enrrE mno.a rnd agiicu;turnl lorrs from lnlernili.nil atencies and
Drdilcrs baso ln conrr.sr, somecounlrag rr.dl( lrom rdmft.rclai hank5 and rii!.:t
nrvr h.d ro rcrf on rmDo:t ng much cl enerrJ,

Gorrrnmenl pollcies rnd aallons

$rhire in?ard o.ienrei policirs ray Eror
rlialerp.ns on oi f,rn!lac(!rin8. conlinleC [rDansion and Technolot] transfe.
rleveloJrDeni i5 deFgndeit !n 6cre owlar! Pa.[ides fron nul:i.ahonar coroo,Er o t
o.enFd p:licies and a no/r lo a rnarhel: ^- are h!-drred n r inls. Tecnnarou.,rr r,{
ojiented .!proadh. 6c{€rnienl parLir:iFarion is {iven bf inlern6lr!.nr a6enc es
an. nr{rlenLion ar! also ice as lilal. Th!/
Ecd rD cr{nte a budg! 3urpus lo protd! -
caJJilalbr iie!srmon1 byconr/r) ling culJlc
ciFrncirlr.,
llr.
I aron a.d pub
'c
dcor drecl
rien: BL ol imlorred copiro to
il0
Nlcmbership ol reglonal blocs
in?asnnenr ln ilraslJucturo !n'l oroduclile
n.nf,lad(u:ni: orollde incc.tlrcs ior h'r in ireio mo? Pir,'{. ft. mar;(e11or
ir!esxrenr liberall$e rr.do rid iiurices fiaa!l€crurod g.ods .fd in.rerse
r€Fter Tr3ding conditlons
brc$ in rk l5 edu;alon: rrolidc politi.rl cooPeruli0n betrrD4n
Tcrms ollrad3 in rniation 10 oiports €nd
sral it! znd be r€adylo Fursle si,!.iu.ar counlries e,r:. tler ca s
irlports i.om tjereloFlnE colnire! need
r.ed;u5iment5 to sult chanded ciicumsrances 0embe.shiD ol N,lFilr dnd Td:83n,
Srrih Korea Si.,[nFo'e
ra be dersirni.e.!. Exlenl oili'ill a.d
ii\psrr !uc.lar aga'rjsl Eoods and produ.e
tofr devel.! n! ceunirie5 and tne erienl
€cotramic condltlons o/::ade lbera iraton under lhe GAIT
Adeq!?tc llnonciar ana drnrr i.lrasrrucl!re. iol.y shoud.lso be declded Stacnas[.
nse in reall.con.s |o e.larle mnrket ?ni l or !nrxpccrod hipFcninds Jlle.r rrcrLc
inc€nsed DroDemrq lo s3!e to pFrde I
:rading condniois 3id .arEnal
Fiveie caril6, i.cre.sed in econom es €,9. rhc olrshcck o! 197:l
roserch end deElonmeni'f!estmenl
tq adv.nc: homc ;nd inslabll 1y ol
nteroarional cutre.cie5
g:crr r.ihnol.g! prom o1e 5 l6vnur.bl! controlin BrF(h dnd increased ;re rdil.rl ln lhe s,rdnen rlse in r;lxc nl
lrl.ge! bctv&n sectors ixe.JnFarere fen igiinsi lhe dot;r,

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 produclion

Production 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-skilled
lqbour con mqnqge. For e.9. the losk of shoe ossembly hos been broken down inio
highly speciolised gluing ond slilching losks, enobling Nike to shift such jobs oround
LDCs in seorch for the cheopest lobour.

At the some iime, firms hove turned to compuier technology ond outomotion to
reduce lobour costs ond increose efficiency os 1 robot con generolly pefiotm the
tosk of of leost 2 people.
The prevolence of computer technology ond outomolion is indicoted by the sole of
industriol 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 industriol
relotions ihoi developed oround these ptocesses. At the le\el of economy, Fordism
con be thought of os ihe btinging logethet of moss production wiih mqss
consumption, which delivered susioined growth, noiobly in ihe lhtee decsdes aflet
t945.

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-eoslern
fioly in the l97js. Aerc, in controsi wilh the older industriolised regions, smoll
fitms were orgonising os coopeTofive networks of subcontroclors- The work
process, divided qnd de-skilled by Toylorism, oppeorcd to be rcintegrcled. And the
focus wos on'flexible speciolisqtion' in response to chqnging consuner or nqrket
demond. 5ubsequently, vqrious inifiqfives such os off-shorin9, just-in-fine
producfion ond fhe growth of o peripherol workforce have 6een seen os sympioms
of o more widespreod trend.
ii. Flexibleproduction
The 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 (flexible
production).
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 large
factory known as Fordist production. The Fordist model is cost driven. Here attention is
paid to increasing productivity levels, lowering costs and reducing human intervention.
Labour was replaced by machines, but at the expense of increased specialisation and
reduced 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 of
large industrial plants and regions which concentrate in certain products. With such
clustering of activities, savings or benefits are derived.
(B) THE NEW PRODUCTION METHOD

Flexible Production (Specialisation)

Flexible machines
These significantly reduce the cost penalty for short production runs and batches
because 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 Aided
Manufacturing has changed the way factories are run. This especially applies to car &
wafer chips (basically high value-added) where eveMhing from design to manufacturing
and packing are automated.

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

Flexible specialisation and integration

This describes the ability of firms to respond to fluctuations in market demand and to
adopt 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 greater
use 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 of
subcontracting 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 its
suppliers.

The essence of JIT is reduction of stored parts by affanging the provision of parts when
they are needed to go into the parent item, with delivery on the same day or even every
hour. Early attempts at JIT merely transfeffed the burden of stoing parts from the major
manufacturers to their suppliers. What effectively should happen with JIT is synthesised
manufacturing, where JIT extends all the way along the supply chain, ensuring each
level 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 produclion
Multi-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 the
trodiiionol boundories of his or her origincl troining. Some of the reosons for the
introduclion of multiskilling include:

. To increqse lobour productivity

. Cotet to the declining number of trodespeople ond cqter for o criticol skill
Shortoge
. Cteote o more flexible lobour force oble to meet chollenges, improve projecl
performonce ond better utilise the currenf pool of skilled workers
. To utilise lobour so thqt workers possess o ronge of skills suitoble for more thon
one work proceSS
. Develop competency within the wotklotce ond ollow full deployment of
quolif icotions ocross the industry

Problems thot offeci mulii-skilling ore both bosic ond procticol. Bqsic problems ore
difficult lo overcome qnd include limits on humon skill retenlion ond ihe difficulty
of 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 the
occepionce 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 unskilled
workers. 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" thot

reod 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 lqbour
In lroditionql indusfries, computerisoiion leods lo lhe replocenent of workers.
Where workers ore retained, they ote reduced to mere mochine supervisors-

vii. Re-skilling
Wilh flexible producfion, there is the possibiliiy of re-skilling the worker. This is
becouse 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 time
monogement skills mcy be picked up olong the woy.

viii. Environmentol controls

6lobol 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 the
ozone loyer is coused by the use of certoin chemiccls ihoi move upwords in tho
the 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 - World
Resources Institute)j loss of biodiversity

fn response fo lhese probletns, issues of sustoinoble development hqve oppeored oi

severol levels. As ihe world becomes increosingly conscious of the need to consetve
the environment, firms hove olso moved towords greqter environmeniol-friendliness
in their production. The ideo of environmentol stewordship, corPoroie sustoinobility
ond 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 ofthe
leading suslainability-driven companies worldwidc. More info on hltpr//ww$.sustainabilitv indcxcs.conr/