Explain the new international division of labor theory and compare the use of global commodity chains

Question

What will be an ideal response?

Answer 1

According to the new international division of labor theory, commodity production is split into fragments that can be assigned to whichever part of the world can provide the most profitable combination of capital and labor. Consequently, the new international division of labor has changed the pattern of geographic specialization between countries, whereby high-income countries have now become dependent on low-income countries for labor. The low-income countries provide transnational corporations with a situation in which they can pay lower wages and taxes and face fewer regulations regarding workplace conditions and environmental protection. Overall, a global manufacturing system has emerged in which transnational corporations establish labor-intensive, assembly-oriented export production, ranging from textiles and clothing to technologically sophisticated exports such as computers, in middle- and lower-income nations.

The global nature of these activities has been referred to as global commodity chains, a complex pattern of international labor and production processes that result in a finished commodity ready for sale in the marketplace. Some commodity chains are producer-driven whereas others are buyer-driven. Producer-driven commodity chains is the term used to describe industries in which transnational corporations play a central part in controlling the production process. Industries that produce automobiles, computers, and other capital- and technology-intensive products are typically producer-driven. In contrast, buyer-driven commodity chains is the term used to refer to industries in which large retailers, brand-name merchandisers, and trading companies set up decentralized production networks in various middle- and low-income countries. This type of chain is most common in labor-intensive, consumer-goods industries such as toys, garments, and footwear. Athletic footwear companies such as Nike and Reebok and clothing companies like The Gap and Liz Claiborne are examples of the buyer-driven model. Since these products tend to be labor intensive at the manufacturing stage, the typical factory system is very competitive and globally decentralized. Workers in buyer-driven commodity chains are often exploited by low wages, long hours, and poor working conditions.