College of Education

School of Continuing and Distance Education2014/2015 – 2016/2017

SOCI 424:

THE CONTEXT OF DEVELOPMENT

AND UNDERDEVELOPMENT

Lecturer: Dr. James Dzisah

Email: jdzisah@ug.edu.gh

SESSION 7:

GLOBALIZING DEVELOPMENT I: THIRD WORLD INDUSTRIALIZATION IN CONTEXT

SESSION OVERVIEW

This session outlines the emergence of a global production system. Development no longermeans replicating economic activities within a nation-state, but rather, requiresspecialization in the world economy. A global labour force began to form during thedevelopment project. A New International Division of Labour (NIDL) emerges with therelocation of de-skilled tasks to lower-wage regions of the world, but global subcontractinggradually transforms the North-South bifurcation of labour. As firms have relocated jobsfrom First World factories to Third World Export Processing Zones (EPZs), organized labourgives way to low-cost, unorganized labour. Lean production and post-industrial workemerge whereby Third World labourers are cycled into low-skill, low-pay jobs.

Goals and Objectives:At the end of the session, the student will be able to:1. Explain the emergence of a global production system2. Examine how Newly Industrializing Countries (NICs) and New Agricultural Countries

(NACs) provide a platform for TNCs leading to proliferation of the “world factory” andthe “world farm”

3. Interrogate why as countries “upgrade” to higher skilled labour, “defeminization”occurs.

SESSION OUTLINE1. The Development Project Reconstructs a World Market2. Shift from Development to Globalization Project3. Export-oriented Industrialization (EOI) and NICs4. The World Factory5. The Global Production System6. Export Processing Zones (EPZs)7. New International Division of Labour (NIDL)8. From NIDL to Global Labour Force9. Unprotected Labour10. Lean Production11. Rise in Post-Industrial Work12. Corporatization of World Markets13. Global Sourcing14. Activity15. References

THE DEVELOPMENT PROJECT RECONSTRUCTS A WORLD MARKET

• Cold War Rise of U.S.-centered world economy

– Military and economic largesse secured informal empire

– Freedom of enterprise

– U.S. Dollar as international currency

• U.S. Federal Reserve System led central banks in regulatinginternational monetary system

– Military and financial aid assisted Third World nationaldevelopment targets

SHIFT FROM DEVELOPMENT TO GLOBALIZATION PROJECT

• “Economic nationalism” an ideal, not a guarantee

– Some domestic production converted to exports

• Deepening integration of production relations across(not within) nation states:

– Growing gap between First and Third World livingstandards

– Differentiation among states within the Third World(i.e.: NICs)

EXPORT-ORIENTED INDUSTRIALIZATION (EOI) AND NICS

• EOI relocated manufacturing of consumer goods, machinery, andcomputers to the Third World– 1960-1979: Third World manufacturing exports increased in share of world

trade from 6 to 10%• NICs accounted for the bulk of export growth

• Asian NICs’ EOI exceptional for geopolitical reason:– East Asian Pacific perimeter strategic in Cold War

– Military alliances opened U.S. markets to exports

– Japan had historic trade and investment links

• Global consumers and global labor force reproduced each other

THE WORLD FACTORY

• NICs’ strategy of EOI sparked “World Factory”phenomenon– Spread of manufacturing export platforms

• Definition: “World” products produced in stepsdistributed among geographically dispersed sites like anassembly line at single/multiple sites– Aided by the technologies of the “information age”

• Transnational Corporations (TNCs) try to reduceproduction costs to be more globally competitive

THE GLOBAL PRODUCTION SYSTEM

• Japanese relocated production in East Asia

• Mexican Border Industrialization Program (BIP)

– Implemented by Mexican government in 1965

– Foreign-owned labour-intensive assembly plants(maquiladoras) produce garments, electronics, toys

– Government grants concessions to firms• Wages at fraction of U.S. rates

• Minimal taxes and import duties

• Avoid strict environmental laws

– Severe environmental contamination and healthhazards/chronic illnesses

EXPORT PROCESSING ZONES (EPZs)

• Specialized manufacturing export areas– Minimal customs controls

– Usually exempt from labor laws and domestic taxes

– By 2006: 3,500 EPZs in 130 countries employed 66 million workers (40million in China)

• Favor export markets over domestic market development– Global corporations profit from lower wages

– Third World governments gain investment and foreign currency

• Serve as enclaves– Physically separate

– Receive imported materials and components

– Deny workers civil rights and working conditions

NEW INTERNATIONAL DIVISION OF LABOUR (NIDL)

• Relocation of deskilled tasks to low-wage regions

• Creation of global labor force caused by

– Depeasantization• (But depeasantization doesn’t create global labor force alone)

• 1950-1997: World’s rural population decreased by 25%, creating“planet of slums” in cities

– Simplification and de-skilling of 1st World manufacturing work

– Relocation of routine tasks as low-cost jobs

• NIDL results in bifurcation of global labor force

– Skilled labour in First World, unskilled labour in Third

FROM NIDL TO GLOBAL LABOUR FORCE

• Rise of global subcontracting transformed tidy NIDLbifurcation into “bifurcation everywhere”– East Asian NICs “upgraded” to specialize in more skilled, more

male labor (e.g., semiconductors)

– Spread of global and regional sourcing

– Global subcontracting threatens organized labor in GlobalNorth

• New bifurcation: separation between stable, well-paidwork and casual, low-cost labor– No specific geography

UNPROTECTED LABOUR

• Global subcontracting system eliminates and/orweakens regulation of work conditions

– 20 million bonded laborers worldwide

– 80 million children under 14 working in hazardous conditions

– Often 14-hour days

LEAN PRODUCTION

• Definition: Trimming and fulfilling of less skilled jobsthrough subcontracting arrangements that rely oncasual labor

• Example: Outsourcing of the U.S. automobile sectorfrom the late 1970s

• Percent of unionized workforce fell from two-thirds toone-quarter by mid 1990s

• 1975 -1990: Low-wage workforce grew by 142 percent,from 17 to 40 percent

RISE IN POST-INDUSTRIAL WORK

• 1970-1994: Manufacturing jobs fell in U.S, Britain,France, Germany (many “low-tech”)– 50% of apparel market in U.S. is cheap imports from Asia and

Latin America– In 1990’s, footwear worker in Indonesia earned $1.03 per day

vs. $6.95 per hour in U.S.

• Post-industrial work partially fills the gap– Example: retail, health care, security, finance, restaurants– Migrant labor, temporary, part-time employment, and

multiple jobs are common– Manufacturing labor lost organizational and numerical power

RISE IN POST-INDUSTRIAL WORK Cont.

• Lean production also creates “Third World” workingconditions in global centers

– Britain became site for offshore investment from Europe withits weakened union rights, elimination of minimum wages andcuts to unemployment benefits

– Sweatshops in New York City

– Manufacturers keep sourcing flexible• Arrangements with independent suppliers

• No long-term, formal arrangements with suppliers

• Firms use abstract, flexible and expendable global labour force

CORPORATIZATION OF WORLD MARKETS

• Transnational Corporations (TNCs) make up two thirdsof world trade– TNCs control most financial transactions, biotechnologies,

industrial capacity– Top five TNCs in each major market typically account for

between 40-70% of all world sales– Wal-Mart is the largest corporation in the world

• “…the framework and content of development appear tohave been redefined—not as governments pursuingsocial equity for national citizens, but as corporationspursuing choice for the global consumer-citizen.”

GLOBAL SOURCING

• Strategy used by TNCs and host governments to improve marketposition and secure predictable supplies of inputs

– Substitute flexible for standardized mass production

– Using smaller and less specialized labor forces

– Flexible production allows segmentation of consumer markets,based on social class incomes

• “Just-in-Time” (JIT) “flexible mass production”

– Lets firms respond to volatile consumer markets

Capital-intensive sectors, firms invest in regional sites to respondquickly to local market signals

SESSION SUMMARY

• This session outlines the emergence of a global productionsystem.

• Development no longer means replicating economic activitieswithin a nation-state, but rather, requires specialization in theworld economy.

• Newly Industrializing Countries (NICs) and New AgriculturalCountries (NACs) are shown to serve as export platforms fortransnational corporations.

• In this context, the “world factory” and the “world farm”proliferate. Workers’ rights and food security are not protected.

SESSION SUMMARY Cont.

• A global labour force began to form during the development project.• A New International Division of Labor (NIDL) emerges with the

relocation of de-skilled tasks to lower-wage regions of the world, butglobal subcontracting gradually transforms the North-South bifurcationof labor into a bifurcation of labor everywhere.

• Global sourcing has spread. As firms have relocated jobs from FirstWorld factories to Third World Export Processing Zones (EPZs),organized labour gives way to low-cost, unorganized labor. Leanproduction and post-industrial work emerge.

• Third World laborers are cycled into sweatshops where womenpredominate in low-skill, low-pay jobs. As labor organizes, as wagesrise, or as countries “upgrade” to higher skilled labor, “defeminization”occurs.

• Transnational corporations use global sourcing, “Just-in-Time”production, and both regional and global patterns of integration

ACTIVITY

• What is attractive about the Export Processing Zone (EPZ)to host governments, and how has such ‘export-orientedindustrialization’ (EOI) transformed the meaning of thedevelopment project?

• In what sense is global development realized throughinequality? Does this change the meaning ofdevelopment, or confirm that development is a processfor the long term (as in the idea of a ‘developmentladder’)?

• In what ways does outsourcing alter government, andcorporate, control (respectively) over the developmentprocess? What are the associated costs and benefits ofsuch ‘globalization’ in both First and Third Worlds?

REFERENCES

• McMichael, Philip (2012). Development and Social Change:Global Perspective (Fifth Edition). Los Angeles: SagePublications, Chapter 4, pp. 80-99.

• Cohen, Michael and Robert Shenton. 1995. “The Invention ofDevelopment.” Pp. 27-43 in Jonathan Crush (ed), Power ofDevelopment. London and New York: Routledge.

• Esteva, Gustavo. 1991. “Development.” Pp. 1-23 in WolfgangSachs (ed), The Development Dictionary. London: Zed Books.