Geography Reference
In-Depth Information
firms exported the low technology, labour-using parts of their industrial process
to poor countries, and kept the more sophisticated parts in the home country.
This was not really a new finding; the dependency writers had for some time
been basing their critique of capitalism on the unequal exchange between a
centre with the manufacturing, and a periphery condemned to producing primary
products. This was the older or classic division of labour, separating primary
producers from manufacturers. The change observed by 1980, to the “new
international division of labour”, was the move of all countries towards more
technologically demanding activities. This meant that while there was continuing
technological change and new industries in the centre, some less demanding
industries or processes, and no longer just primary production, could be located
in the periphery. If, in the past, Germany made steel and Brazil produced the iron
ore for it, now Brazil might also make basic steel ingots, and Germany would
work these into engineering products such as cars.
The rules of comparative advantage still apply, so that places with an
abundance of labour are more likely to have labour-using production, and those
with more capital and high levels of education and training (human capital) are
likely to retain the technically advanced industries and processes. Textiles and
clothing production are a classic case, as the technology and capital requirements
are relatively low, and labour costs quite high, so that this industry tends to be
exported to developing countries. Often the export is within one firm, which
establishes a branch plant in a foreign country.
The same division may be arrived at by looking at individual products or
groups of products. Vernon (1966) described the “product cycle” to show how
changes in production would occur over time, with a product that starts with an
innovation, grows into many experimental forms, then becomes standardized,
and finally goes into decline through lack of any change, plus the advent of
alternative products which take away its market. Malecki (1991:126-8)
described several of the cycles that occur in similar form, and some of these may
be put together to show a general set of changes over time-space.
To put this in concrete terms, we may group all of these aspects together in
Table 3.1
The product cycle.
Aspects
S
tage I
S
tage II
S
tage III
S
tage IV
Technology
Innovation and
experiment
Growth
Maturity and
standard product
Decline
Profits
No profit
Growing
profitability
Stability of
profits
Decline with
monopoly profit
Innovation
Product
innovation
Product
innovation
Process
innovation
Process
innovation
Geography
Home region
Home country+
DC branches
Home+LDC
b
ranches
Home/DC/LDC
h
ierarchy
