Globalisation and Labour

The New International Division of Labour

Globalisation has reshaped where and how work is done. A new international division of labour has emerged: routine manufacturing and the jobs that go with it are increasingly concentrated in cities of the Third World, while design, marketing, and high-value functions stay in wealthy countries. This is not a random shift — it is driven by the search for cheaper labour and greater flexibility.

You have already seen outsourcing (Chapter 4) and contract farming (Chapter 5) as examples of this pattern. Here, the textbook uses the story of Nike to show how it works in practice.

The Nike Example: A Story of Footloose Production

Nike was founded in the 1960s by Phil Knight, who began by importing shoes from Japan and selling them at athletics meets. The company grew into a transnational corporation. Its headquarters are in Beaverton, Oregon, near Portland. Yet only two factories in the United States have ever made shoes for Nike.

• In the 1960s, Nike shoes were made in Japan.
• As Japanese labour costs rose, production moved to South Korea in the mid-1970s.
• When South Korean labour became more expensive, production spread to Thailand and Indonesia in the 1980s.
• Since the 1990s, Nike shoes have been made in India.

The logic is simple: wherever labour is cheapest, production goes. If labour becomes cheaper elsewhere, production centres move again. This constant mobility makes the labouring population extremely vulnerable and insecure. Workers cannot count on stable, long-term employment — the factory may simply leave.

Flexibility Favours Producers

This flexibility of labour works overwhelmingly in favour of producers, not workers. Instead of mass-producing goods in one centralised location — the old system called Fordism — we have moved to post-Fordism: flexible production at dispersed locations. A single product may be designed in one country, have components made in several others, and be assembled somewhere else entirely.

Box 6.4: The Pontiac Le Mans — A Global Car

The textbook gives a striking example from Reich (1991). General Motors produced the Pontiac Le Mans, an ostensibly American car. Of its showroom price of 20,000 dollars, only 7,600 dollars went to Americans — workers and management in Detroit, lawyers and bankers in New York, lobbyists in Washington, and shareholders across the country. The rest was distributed globally: