New International Division of Labor

Capitalist development has always occurred unevenly—spatially, sectorally, and temporally—producing differential degrees of industrialization and varying modes and levels of integration into the world economy. Since the 1970s, however, there has been a widespread recognition that a fundamental transformation (now commonly understood as globalization) is taking place in the conditions of capitalist accumulation and expansion of capital on a world-historical scale. The term new international division of labor (NIDL) was coined by theorists seeking to explain the spatial shift of manufacturing industries from advanced capitalist countries to developing countries—an ongoing geographic reorganization of production, which finds its origins in the formation of the “world market for labor” and “world market for industrial sites” famously analyzed by the German political economists Folker Fröbel, Jürgen Heinrichs, and Otto Kreye. Under the “old” international division of labor, underdeveloped areas were incorporated into the world economy principally as suppliers of minerals and agricultural commodities. A growing emphasis on factors such as the internationalization of production, the greater [Page 2020]sway of transnational corporations (TNCs), and the enhanced mobility of capital facilitated by modern communications technology and liberalization has generated a transition toward an NIDL in which low-wage developing countries increasingly provide sites for labor-intensive industries that manufacture goods for sale in the world economy.

Theories of the NIDL assign a major role to TNCs as the orchestrator of a global reallocation of manufacturing away from advanced countries toward the developing countries. Varying in emphasis from a “neo-Smithian” focus on changes in the world market to a “neo-Ricardian” one on capital exports, theories of the NIDL have sought to explain a dual pattern of “industrialization” in the developing countries and “deindustrialization” in the advanced countries. In seeking to explain this pattern, the concept of an NIDL focuses on the determining roles played by (a) the development of a worldwide reservoir of potential labor power; (b) the development of the labor process in manufacturing, which has led to the decomposition of production processes into elementary units and the deskilling of the labor force; and (c) the development of the forces of production in the fields of transport and communication, which has made industry less tied to specific locations. These preconditions, together with the desire of TNCs to maximize profits, result in industrial relocation to employ what Fröbel, Heinrichs, and Kreye described as readily available, inexpensive, and “well-disciplined” labor. One key argument of NIDL theorists is that with new technologies, especially space-shrinking systems of transport and communications, sites for manufacturing are increasingly independent of geographical distance. Capital now not only searches for fresh markets but also seeks to incorporate new groups into the labor force.

Thus, it was initially through the export processing zones of the globalizing electronics and textile industries that many women from the developing world have become part of the international working class. Through the exploitation of their labor power within world market factories situated in developing, low-wage countries, specific regions within what was formerly known as the Third World became manufacturing sites for consumer markets in the advanced countries through transnational production arrangements involving foreign direct investment or international subcontracting. In that the term global factory refers specifically to the sites of production in transnational production arrangements, it is not limited to “factories” per se but also includes petty commodity producers, often toiling in “informal” establishment such as sweatshops and home industry. Despite this diversity in possible employment forms, the key argument of NIDL theorists is that working conditions in the global factories situated in developing countries tend to be poor on account of their raison d’être—to enable TNCs from the core advanced countries to redeploy their capital for goods production to low-cost labor sites in the periphery, where TNCs and their subcontractors extract surplus value from Third World workers.

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