New international division of labour

Average GDP PPP per capita 2010

New International Division of Labour (NIDL) refers to the global shift in the manufacturing processes and labor patterns that has occurred since the late 20th century. This phenomenon is characterized by the outsourcing of industrial jobs from developed countries to developing countries, driven by corporations' desire to reduce costs and increase efficiency. The NIDL is a critical aspect of globalization and has significant implications for economic development, international trade, and labor markets worldwide.

Overview

The concept of the New International Division of Labour emerged in the 1970s as multinational corporations began to decentralize production, moving manufacturing from high-wage economies in North America and Western Europe to low-wage economies in Asia, Latin America, and Africa. This shift was facilitated by advancements in transportation, communication technologies, and the liberalization of international trade policies. The NIDL is marked by a transition from a world economy dominated by vertical integration within developed countries to one characterized by horizontal integration across many countries.

Causes

Several factors have contributed to the emergence of the NIDL:

• Globalization: The increasing integration of world economies has made it easier for companies to operate across borders.
• Technological advancements: Improvements in transportation and communication have reduced the costs and complexities of managing production across different countries.
• Deregulation of trade: The reduction of tariffs and non-tariff barriers has made it more economically viable to produce goods in one country and export them to another.
• Search for cheaper labor: Companies are motivated to reduce production costs by seeking out the cheapest labor markets.

Implications

The NIDL has profound implications for both developed and developing countries:

• For developed countries, it has led to the loss of manufacturing jobs and has contributed to the decline of traditional industrial sectors. However, it has also led to lower consumer prices and new opportunities in the service sector and high-tech industries.
• For developing countries, it has created opportunities for economic growth and employment. However, it has also raised concerns about labor exploitation, environmental degradation, and the stability of relying heavily on foreign investment.

Criticism

The NIDL has been criticized for promoting a race to the bottom in labor standards, where countries compete to offer the lowest wages and the least stringent working conditions to attract foreign investment. Critics argue that this leads to exploitation of workers and prevents developing countries from advancing to higher-value-added sectors of the economy.

Conclusion

The New International Division of Labour represents a significant shift in the global economic landscape, with wide-ranging effects on employment, industrial development, and international trade. While it offers opportunities for economic growth and development, it also poses challenges that require careful management to ensure that the benefits are widely distributed and that negative impacts are mitigated.