(NEW) INTERNATIONAL DIVISION OF LABOUR

The International Division of Labor (IDL) is the term that describes how countries have specialized in producing certain economic goods: they do not work on the same products and, as a result, exchange their production among themselves. This specialization of countries or areas was initially based on the simple comparative advantages of different countries, but it has produced a further division of the production process.

Old IDL

Traditional IDL assigns the production of manufactured goods and services to developed countries; and the supply of primary products in general (agricultural products, raw materials) to poor countries. However, with the development of techniques but also of countries, the international division of labor is changing. Thus some developing countries have started to manufacture common manufactured products (textiles, for example).

New IDL

We sometimes speak of a “new international division of labor” to designate the current specialization of countries: the new industrialized countries, especially Asian ones, today produce manufactured products, including high-tech products. Developed countries mainly manufacture technological products and services whose production requires high skills. The poorest countries remain confined to primary products with low added value.

Until the 1970s: "Old international division of labor". Colonization and exploitation of India, parts of China and Africa by European states. Asymmetric exchange of primary products from colonized countries against manufactured products exported by colonizing countries. Decolonization, between 1947 and 1960, allowed the emergence of new industrialized countries.

After the 1970s: “New international division of labor”. The first wave of these NIDL was dominated by four Southeast Asian countries (the four Asian dragons): Hong Kong, South Korea, Singapore and Taiwan, as well as two Latin American countries: Brazil and Mexico.

Then, from the 1980s onward, a second wave arrived which consisted mainly of Asian countries such as Thailand, Malaysia, Indonesia, Philippines and Vietnam (Asian tigers).

Due to their skilled and cheap labor, these countries were used by multinational firms as bases for subcontracting. They were first engaged in particular industrial sectors, such as optical instruments, watches, toys and machine tools. The direct investments of multinationals in these countries allowed, on the one hand, the transfer of technology, and on the other, the creation of new wealth which in turn financed new projects.

Activities: 

Look at the map about manufacturing countries. Then search on the Internet what are the richest countries in the World (according to nominal GDP). Are they (more or less) the same countries?

Loot at the map on coffee: where is it produced? And consumed? Do you think is an expensive product or not?

The same applies to chocolate: it is produced in poor countries but, who is getting the biggest part of the "bar"?

What are the differences between the old and the new IDL?

What countries are part of the Asian Dragons? And Asian Tigers? Search on your home something made in there (except from China). Is it a high added value product or not?