New International Division of Labor
NIDL (New International Division of Labour)
LO: Discuss the causes and impact of the emergence of the NIDL on global economic activities
The New International Division of Labour refers (quite broadly) to the global spread of labour use across international borders in the face of globalization and increasing industrial competition.
Characteristics of NIDL
TNC Driven – large capital outlay for global investments
Hierarchical, tripartite – see TNC notes
Profit driven – capital accumulation near the top of the hierarchy (where R&D is concentrated)
Organic and dynamic relationships – Producers and ‘actors’
Uneven – some countries benefit from globalization much more than others. NIDL favours * Geopolitically stable economics * Competent, capable governments * Good and reliable infrastructure
Causes of NIDL Pushes to a NIDL | Pulls of a NIDL | High labour costs, unionisation in DCs | Cheap, docile workforce in LDCs. Low/no unionisation | Saturated markets, product life cycles need to be extended | Search for new markets for investments | Resistance to change from supranational institutions | Improvements in transport and communications = increased mobility and efficiency | | Active role of governments in ELDCs in attracting foreign investment – EPZs, tax holidays etc.. |
Impacts of NIDL LDCs | DCs | Employment | Push towards linearisation and beyond | Increased SOL | More competitive product pricing from NIDL – consumers benefit | Technology, skills transferred | Profit maximization for TNCs | Limited to selected, mainly labour-intensive industries | Loss of lower level jobs – blue-collar workers | Limited transference of technology and skills | Socio-political resentment towards LDCs – protests and protectionism (EU) | Profit repatriation | | Subject to mobility of TNCs – vulnerable to restructuring and reorganization | | Economic and political dependence |
LO: Discuss the causes and impact of the emergence of the NIDL on global economic activities
The New International Division of Labour refers (quite broadly) to the global spread of labour use across international borders in the face of globalization and increasing industrial competition.
Characteristics of NIDL
TNC Driven – large capital outlay for global investments
Hierarchical, tripartite – see TNC notes
Profit driven – capital accumulation near the top of the hierarchy (where R&D is concentrated)
Organic and dynamic relationships – Producers and ‘actors’
Uneven – some countries benefit from globalization much more than others. NIDL favours * Geopolitically stable economics * Competent, capable governments * Good and reliable infrastructure
Causes of NIDL Pushes to a NIDL | Pulls of a NIDL | High labour costs, unionisation in DCs | Cheap, docile workforce in LDCs. Low/no unionisation | Saturated markets, product life cycles need to be extended | Search for new markets for investments | Resistance to change from supranational institutions | Improvements in transport and communications = increased mobility and efficiency | | Active role of governments in ELDCs in attracting foreign investment – EPZs, tax holidays etc.. |
Impacts of NIDL LDCs | DCs | Employment | Push towards linearisation and beyond | Increased SOL | More competitive product pricing from NIDL – consumers benefit | Technology, skills transferred | Profit maximization for TNCs | Limited to selected, mainly labour-intensive industries | Loss of lower level jobs – blue-collar workers | Limited transference of technology and skills | Socio-political resentment towards LDCs – protests and protectionism (EU) | Profit repatriation | | Subject to mobility of TNCs – vulnerable to restructuring and reorganization | | Economic and political dependence |