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New international division of labour

From Wikipedia, the free encyclopedia

In economics, the new international division of labour (NIDL) is an outcome of globalization. The term was coined by theorists seeking to explain the spatial shift of manufacturing industries from advanced capitalist countries to developing countries—an ongoing geographic reorganisation of production, which finds its origins in ideas about a global division of labor.[1] It is a spatial division of labor which occurs when the process of production is no longer confined to national economies. Under the "old" international division of labor, until around 1970, underdeveloped areas were incorporated into the world economy principally as suppliers of minerals and agricultural commodities. However, as developing economies are merged into the world economy, more production takes place in these economies.[1]

This has led to a trend of transference, or what is also known as the "global industrial shift", in which production processes are relocated from developed countries (such as the US, European countries, and Japan) to developing countries in Asia (such as China, Vietnam, and India), Mexico and Central America. This is because companies search for the cheapest locations to manufacture and assemble components, so low-cost labor-intensive parts of the manufacturing process are shifted to the developing world where costs are substantially lower. Companies do so by taking advantage of transportation and communications technology, as well as fragmentation and locational flexibility of production. From 1953 to the late 1990s, the industrialised economies' share of world manufacturing output declined from 95% to 77%, and the developing economies' share more than quadrupled from 5% to 23%.[2]

World map showing countries above and below the median 2010 GDP (PPP) per capita, US$10,700. Source: IMF (International Monetary Fund). Blue above world GDP (PPP) per capita Orange below world GDP (PPP) per capita
World map showing countries above and below the median 2010 GDP (PPP) per capita, US$10,700. Source: IMF (International Monetary Fund).
Blue above world GDP (PPP) per capita
Orange below world GDP (PPP) per capita

The resultant division of labor across continents closely follows the North–South socio-economic and political divide, where in the North—with one quarter of the world population—controls four fifths of the world income,[3] while the South—with three quarters of the world population—has access to one fifth of the world income.[4]

A summary

The NIDL is a spatial division of labor due to cut ties with national economies. Underdeveloped economies used to be incorporated with the world economy as suppliers of minerals and agricultural commodities. It has since added more production to these types of economies. With this, a "global industrial shift" occurs, meaning that production processes are relocated from developed countries to developing countries. Companies need a low cost location in order to manufacture and assemble products. Developing countries are able to produce at substantially lower prices than a developed country would.

In the NIDL, the north controls about 3/5 of the world's income while the south controls about 1/5.

YouTube Encyclopedic

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  • Division of Labor: Burgers and Ships
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The benefits of voluntary trade are obvious. Suppose this guy has bananas and this guy has oranges. He needs oranges for marmalade and this guy needs bananas for banana bread. They swap-- they exchange. Each guy is made better off through trade. In our last video though we saw that a key fact about the modern world involves more than simple exchange. More than merely moving existing things around. We grew rich by also producing more stuff per person. Say you're cooking hamburgers and fries for your family. It might take an hour to prepare the meal because you individually do everything. You start the grill you cook burger chop the fries slice the vegetables-- on and on and on. Now look at how a burger joint makes hamburgers. Each worker has a specific job in the chain of production that serves burgers to its customers. Each worker is specialized. This specialization, what Adam Smith called the division of labor, makes individual workers more productive. No more lost time switching between tasks. Plus as a worker concentrates his effort he gets better at doing the task at hand. But it's not just the specialization of workers that increase output. It's also the development of specialized tools that modern workers use. The burger joint has tools to slice potatoes to cook burgers and to fry the fries. That's just specialization 101. I'm sure you've seen one of these around. The container: they're everywhere! Cargo transported by ship used to be stored in barrels, in sacks, in wooden crates, and off-loaded by hand. The invention of the container though created more than just a metal box to put stuff in With it came a wave specialized technology that dramatically increased productivity of shipping and offloading. Ships themselves evolved, dwarfing their predecessors with the ability to stack containers below and on the deck. Ports changed too, dredging deep waters and providing specialized pilots and gantry cranes to quickly park and unload ships. Driverless yard tractors magically whisk containers away. The containers are put on trucks and trains built specifically to hold them. Workers today are superhuman compared to their brethren of yesteryear. We went from carrying bags on our backs to lifting the equivalent of two school buses with mere flicks of our wrists. To make specialization worthwhile you need to make a lot stuff. For example there is no point specializing in hamburgers if you plan to cook only one burger a week for buying a forklift or crane simply to unload weekly groceries from the family car. Trade provides a market big enough to make it worthwhile to invest in specialization and the bigger the market the more we specialize and hence the more we can produce. Specialization doesn't stop there in our next video, we'll explore the specialization of the most productive engine known to humankind: The human mind. What about the videos after that? Well you decide. You tell us what topics we should cover. Here's the current leader board of questions from our viewers.

See also


  1. ^ a b Warf, Barney, ed. (2010). "New International Division of Labor". Encyclopedia of Geography. Sage Pubs. ISBN 978-1412956970.
  2. ^ UNIDO (1986) World industry: a statistical review, 1985, Industry and Development, 18: Fig. 1; UNIDO database
  3. ^ Mimiko, Oluwafemi (2012). Globalisation: The Politics of Global Economic Relations and International Business. Durham, N.C.: Carolina Academic.
  4. ^ Steger, Manfred (2009). Globalisation: A Very Short Introduction. Oxford: Oxford UP.
This page was last edited on 25 January 2022, at 13:37
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