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Summary emerging economies & global labour
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Summary of 32 pages for the course emerging economies and global labour CH2203 at EUR (samenvatting)
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Week 4Bo Carlson, ‘The Evolution of Manufacturing Technology and Its Impact on Industrial
Structure: An International Study,’ Small Business Economics, 1 (1989) 1: 21-37.
In this article, Bo Carlson examines the impact of evolving manufacturing technology on the
industrial structure of different countries. The author argues that changes in manufacturing
technology have led to significant shifts in the global industrial landscape, including changes
in the size and structure of firms, the nature of competition, and the distribution of economic
power.
Carlson begins by discussing the historical evolution of manufacturing technology, from the
craft production of the pre-industrial era to the mass production of the 20th century. He notes
that the introduction of new manufacturing techniques, such as automation and
computerization, has led to the development of flexible manufacturing systems that allow for
greater customization and efficiency in production.
The author then analyzes the impact of these changes on industrial structure in different
countries, focusing on the United States, Japan, and Sweden. He argues that while the US has
traditionally been dominated by large, vertically integrated firms, the rise of flexible
manufacturing has led to the emergence of smaller, more specialized firms. In contrast, Japan
has a more decentralized industrial structure, with many small and medium-sized firms
working together in networks. Finally, Sweden has a highly concentrated industrial structure,
with a few large firms dominating many sectors.
The author also discusses the impact of these changes on international competition, noting
that firms in countries with more decentralized industrial structures are often better equipped
to compete in global markets. He suggests that this is because these firms are able to respond
more quickly to changes in demand and are more adaptable to new technologies and market
conditions.
In conclusion, Carlson argues that the evolution of manufacturing technology has had a
profound impact on the global industrial structure. He suggests that firms that are able to
adapt to these changes and develop more flexible manufacturing systems are likely to be the
,most successful in the future. Overall, the article provides a valuable overview of the ways in
which changes in manufacturing technology have transformed the global economy.
Main argument:
Plant size in the manufacturing and engineering industry in Western industrial countries has
declined since the early 1970s.
1. De-glomeration or specialisation: the divestiture of non-core businesses in order to
free up scarce resources (particularly management time)to defend and nurture core
business activities
divesture = selling off subsidiary business interests or investments, the selling off of
an asset.
1. New computer-based tech has improved the quality and productivity of small and
medium scale production relative to standardised mass-production techniques which
dominated previously.
Argumentation:
Would expect firms to get larger and larger, given the climate of mergers, and importance of
economies of scale. But this is the opposite of what is happening.
Central example = Metal industry,
average employment declined in 79 out of 106 metal industries. For all metal working
industries as a whole, the average establishment size declined by 12.3%.
The decline in plant and company size cannot be attributed to shrinking
employment across manufacturing industries: on the contrary employment in
these industries increased by 11.3% and total employment.
Value added increased on the average by 160%.
Decline in establishment size related to an increased in the number of establishments
and firms.
This is an international pattern (not just US pattern)
Explanations of the observed behaviour,
increase in the number of plants and firms in most industries and the decrease
in average plan size. This appear to be happening regardless of whether output
and employment in the industry is increasing or decreasing.
,De-glomeration:
Many firms have divested themselves of activities of business which they don’t
consider to be part of the ‘core’ business. Where as in the 60s and 70s, they tended to
swallow up even businesses which were only remotely related to the core business.
There has been a reversal of this trend.
Noe the ides it to prune bacl the proliferation of business in orer to protect and
nurture more crucial line of business. This is the dirrection as a result of the
increase in competition internationally.
Other reasons for divestiture are that aquireing firms often need to retire loans incurred
in makingn takeovers, and a beleif that the infvidial parts of acquried firms are worth
more that the whole.
The possible outcomes of such divestitures
1) elimination,
2) the business unit is established as a new form, often selling its products or
services to the original owners but now under separate ownership and
management. (in both of these cases, the average firm and plant size in the
industry will decrease.
3) The business unit is purchased by another firm which can provide a better
‘fit’ for it (find more synergies in one dimension or another, e.g. marketing,
manufacturing, technical development. therefore absorbing less management
time of other resources.
The immediate result = increase in firm size, but the impact on average
establishment size would depend on whether the plan involved is larger
or smaller than the average firm size.
What often seems to happen is that the newly purchased unit is
consolidated with existing units which eventually reduced the size of
the firm.
The emergence of new computer-based technology:
Improved the quality and production of small or medium scale production relative to
standardised mass production techniques which dominated for the previous 150 yrs.
This happened as a result of the proliferation of the number of products marketed. This
development means that unless real output grows faster than the number of items
produced the number of each item produced is shrinking. therefore it becomes more
difficult to keep highly dedicated equipment operating at full capacity. Also the
, profitability of running business in this way is lower as a result of the high costs of
these systems.
Conclusion:
1. de-glomeration
2. Computer-based tech
Robert C. Feenstra and Gordon H. Hanson, ‘Globalization, Outsourcing, and Wage
Inequality,’ The American Economic Review, 86 (1996) 2: 240-246.
In this article, Robert C. Feenstra and Gordon H. Hanson examine the impact of globalization
and outsourcing on wage inequality in the United States. The authors argue that the increasing
integration of the global economy has led to a significant increase in wage inequality in the
US, particularly for workers in the manufacturing sector.
Feenstra and Hanson begin by discussing the growth of international trade and foreign
investment in the US over the past few decades. They argue that this trend has led to a
significant increase in the demand for skilled labor, as firms seek to take advantage of new
opportunities in global markets. This has resulted in a widening gap between the wages of
skilled and unskilled workers, as skilled workers are able to command higher wages due to
their specialized skills and knowledge.
The authors then discuss the role of outsourcing in exacerbating this trend. They argue that
firms are increasingly outsourcing low-skilled jobs to countries with lower labor costs, which
has led to a decline in demand for these jobs in the US. This has further contributed to the
decline in wages for low-skilled workers and the widening wage gap between skilled and
unskilled workers.
Feenstra and Hanson also consider the impact of globalization on the overall employment
levels in the US. They suggest that while some low-skilled jobs have been lost to outsourcing,
the overall effect of globalization has been to increase employment in the US. This is because
the growth of international trade has led to increased demand for goods and services produced
in the US, which has led to job growth in industries such as transportation, retail, and finance.
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