International division of labour

The international division of labour refers to the allocation of different tasks and responsibilities across nations, which leads to increased efficiency and productivity in global trade. This specialization allows countries to focus on producing goods and services where they have a comparative advantage, resulting in a more interconnected world economy.

The definition used by WILEY online library says that international divison of labour refers to the concept of economic production which by nature is transnational and interdependent on the control and power of labour in different places

The ‘old’ international division of labour is based on the Ricardian view which suggests labour power is based on comparative advantage of the final product

Whereas, the new international division of labour looks at comparative advantage from the perspective of tasks and processes

  • The ‘new’ division of labour is the result of Fordism which collapsed by 1970s; due to high labour costs, more global markets, and demand for non-standardised goods

  • Post-fordism led to the NIDL which saw deindustrialization in developed countries e.g., manchester deindustralised the core = factories shut down and TNCs started outsourcing labour from developing countries

History of International division of labour:

  • Between 18th century to mid-20th centry, manufactured goods were largely assembled in industrialized economies such as the UK, France, and the Netherlands.

  • These products were then traded with other industrialized economies, while the left over surpluses were sold to nonindustrialized economies (dumping in colonies).

  • Raw materials and agricultural products were in turn extracted from these nonindustrialized economies, giving rise to a phenomenon known as the “old” international division of labor.

Three new features that distinguished NIDL:

  1. Geographically the division is wider after the mid-1970s; maufacturing activities spreading to southeast asia, central and latin america, and africa etc.

  2. Intensity and range of transnational economic activities increased as more multinational corporations (MNCs) were formed in the 1970s = which is attributed to the improvements in technology and communications = subsequently enhanced the coordination of production and distribution - increasing MNCs' ability to raise capital through expanding capital markets in the industrialized world following the collapse of the Bretton Woods monetary system (refers to the stable global financial system which was put in place to; create fixed exchange rate; anchor the US dollar to gold = led to stable trade and currency; however, it collapsed; led to floating exchange rates, freer moving capital = rise in globalisation and TNCs

  3. Growing pool of low-skilled or unskilled laborers available for employment in many parts of the world, in part as an outcome of improving agricultural technologies, in part as a result of weak or failed domestic industrialization = MNCs can utilise this to achieve highest profitability