What is the international division of labor
Nowadays,it is common for people to drink a cup of coffee early in the morning,take a bus or drive a car to work and start working with computers while sitting in an ergonomic chair.Indeed,from coffee people drink everyday to electronics equipments people rely on,they are all achievements of international division of labor(IDL).But what is international division of labour exactly and how does it form?This article is to find out the history of the international division of labour.
This article first explores the definition of IDL,involving the old IDL and the new one.Second,it envisions possible impacts of trade friction or trade war between countries on IDL.
International division of labor definition
The global division of labor refers to the global allocation of tasks and production processes among countries.This allocation is driven by specialization and comparative advantage.To better explain what is specialization,let me give you the example of coffee industry chain.In the chain,the raw material,coffee beans,is undoubtedly the most important thing.Coffee trees can only grow in tropical regions,so coffee trees are only available to some low-latitude countries,which acts as a specialization.
Speaking of comparative advantage,it is a theory first intoduced by Adam Smith.The main content of theory is that if one country has a relatively low costs in producing products compared with other countries,then this country should focus on the production of this specific items.
The international division of labor acts as a significant driver of economic globalization,enabling nations to focus on industries where they hold a relative advantage towards other countries.Commonly,the global chain is now separated into three parts:upstream,mainstream and downstream,which is responsible for the raw materials,manufacturing and sales respectively.While the IDL has propelled economic growth and technological exchange,it also raises debates over inequity among countries,sustainability and labor rights.
Old international division of labor
The roots of IDL could be traced back to colonialism,where colonies supplied raw materials to European powers.Later workers in European turned raw materials into manufactured goods.The Industrial Revolution amplified this dynamic,it also helped form the global raw material network.In the book of Empire of Cotton,author clearly manifests how cotton was transported to the UK ,then converted into fabrics,finally sold to the world with extensive trade network of the UK.
However,in this period,international division of labour actually reflected extreme inequality among people in different stances.On one side,People responsible for reaping cotton were usually enslaved,so they weren’t able to receive the due compensation.On the other side,slave owners could reap huge economic profits.In fact,the history of colonialism is history of blood and tears.
New international division of labor
The 20th century saw IDL evolve with post-WWII globalization.Institutions like the World Trade Organization(WTO) and International Monetary Fund(IMF) promoted free trade and set up as a stabilizer of the global trade.Besides,some multinational corporations(MNCs) were founded to fragment production across borders.For example,Volkswagen established subsidiaries in partnership with local Chinese governments to better enter the Chinese market.David Ricardo’s theory of comparative advantage,where countries specialize in goods they produce most efficiently,became a cornerstone of IDL system,encouraging nations like China to become manufacturing hubs and India to excel in IT services.
Compared with the old one,the new international division of labor also Improved worker benefits,including setting up world labor day and estabilshing a union.
However,the inequity between countries still exists.According to average annual income provided by worlddata,the average income between countries remains a gap,where Africa is still the poorest region in the world.The global division of labor actually widens this gap,for the technology in rich countries tend to be more advanced,leading to higher income.On the contrary,the poor country still lacks the capital to advance themselves in technology,so they may be left even further behind by others.
Besides,such ineuqality also reflects on the environment and labor rights,for developing countries have to rely on heavy industry and working overtime to participate in the global supply chain.
Impact of trade friction on international division of labor
Reduced Specialization and Efficiency:
Trade barriers like quota and tariffs increase the costs of cross-border trade, discouraging countries from specializing in areas of comparative advantage.For example,Trump tried to uplift tariffs of imported goods to propel manufacturing returning to America.However,this may lead to an inefficient domestic production of goods,which may cause increasing living costs.
Supply chain reconfiguration:
Firms may relocate production to bypass tariffs.For example,the supply chain of Apple was moved from China to India.This reshapes the international division of labor by creating new hubs of specialization while disrupting existing networks.
The international division of labor remains a double-edged sword. While it drives economic integration and development, it also perpetuates inequalities and environmental costs.As the world steps into a new era when economic globalization seems to walk away,the IDL is left as a legacy of it.Policymakers and corporations must collaborate to ensure the IDL fosters inclusive growth, prioritizing fair wages,environmental stewardship and resilient economies in an ever-evolving world.
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