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New International Division of Labour

Case Study : Automotive Industry Alexander Ryan. New International Division of Labour. New International Division of Labour. The spatial shift of manufacturing industries from MEDCs to LEDCs Offshore outsourcing Increase in demand in NICs

deirdra-lombard
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New International Division of Labour

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  1. Case Study: AutomotiveIndustry Alexander Ryan New International Division of Labour

  2. New International Division of Labour • The spatial shift of manufacturing industries from MEDCs to LEDCs • Offshore outsourcing • Increase in demand in NICs • Creation of new companies in developping countries (ex. Toyota in Japan 1957, Hyundai in South Korea 1968, Tata in India 1991) • An outcome of globalisation • “Old” international division of labour: LEDCs suppliers of minerals and agricultural commodities • 1957 to 1990: LEDCs’ indutrial production 5% → 23% of world industrial production

  3. Car production by country from 1950 to 2013

  4. Car production by manufacturer

  5. Detroit – a victim of NIDL • Motor City - Home of the American automotiveindustry (GM, Ford and Chrysler) • 1950: US produces ¾ of all cars worldwide • 1973 oilcrisis and increasingforeigncompetitionaffected US companies • 2008 crisis: GM and Chrysler file for bankruptcy • March 2013: Detroit files for bankruptcy; declaresfinancial emergency

  6. Reasons for NIDL in automotiveindustry • Cheaper labour, cheaper/better shipping etc. → Offshore outsourcing (ex. Chevrolet in Mexico, Renault in Morocco) • More demand in countries with growing middle class: NICs • China 1976: 1 million cars • 2008: 51 million cars • 2011: 85 million cars • Someone buys a new car in China every 2.3 seconds (38,000 new cars bought per day)

  7. PositiveNegative • Loss of employment in MEDCs for unskilled labourers (ex. Detroit) • Industrial pollution and worker exploitation in countries with restrictions and laws which are more lax • InequalitiesbetweenMEDCs and LEDCsworsened • Accelerates the industrialisation of LEDCs • In order to stay ahead, MEDCs innovate by investing in R&D (ex. aerospace industry still dominated by MEDCs) • “Each country does what it does best” • Cheapergoods

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