A number of theorists have recently put forth the notion of a “new international division of labor” in which the old colonial division of labor involving Third World exports of raw materials and imports of finished goods has been transcended. [1] According to this thesis, Third World countries have been industrialized to produce cheap labor-intensive manufacturing goods for export to the core capitalist countries in exchange for more advanced capital-intensive imports. The proponents of the new division of labor argue that this process reflects the new world capitalist rationality and logic.
We will assess the validity of this perspective by examining a select number of countries (47) drawn from a World Bank study which has data for both 1960 and 1976. [2] In 1976, in 85 percent of these countries, primary commodities accounted for 70 percent or more of exports. In half of them, primary commodities accounted for upwards of 90 percent of their exports.
What is striking about these results is the continuity in the pattern of the world division of labor, 20 years after most countries achieved formal independence. Despite the growth of industrial production in many areas of the Third World, the main role of Third World countries in the capitalist world economy is still as suppliers of primary commodities. Trade diversification and the growth of industrial exports have not been greatly influenced by the political changes accompanying independence. Continuing socio-economic links with the markets and classes in the core capitalist countries are stronger than changes in political leadership. The overwhelming majority of third world countries are still predominantly exporters of primary goods.
The proponents of the “new division” approach sometimes argue that as Third World countries become more “developed” they will begin to modify their position in the world division of labor. If we consider level of income among Third World countries (again using World Bank measures) and divide them into low-income and middle-income countries, we find that over four fifths of the middle-income countries are predominantly primary goods exporters (70 percent or more), compared to less than three quarters of the low-income countries. Clearly, level of development in the national economy is not a good indicator of any propensity among Third World countries to shift their role within the international division of labor. In low-income countries, like Pakistan and India, great unevenness in development manifests itself in a growing industrial export sector side by side with striking poverty. In the middle-income countries, huge labor pools and massive infusions of outside funding — initially, at least, products of politico-military strategic interests — have led to industrial exports from three leading countries (South Korea, Hong Kong and Taiwan).
Of the low-income group, 72 percent have at least 70 percent of their exports in primary commodities. This share of primary exports applies to 82 percent of the middle-income group. Simple growth of income within Third World countries is compatible with continuing dependence on primary commodity exports. In fact, the industrialization-for-export pattern seems to be more typical of the lower rather than the higher income Third World countries.
While the old division of labor still defines the global relationship between third world and core capitalist countries, there is a trend away from this pattern. Almost two thirds of the selected countries show a shift in exports toward non-primary goods between 1960 and 1976.
Thus, there is some basis for examining modifications of exchange within the global marketplace. However, the general trend of diversification still has a long way to go. Almost one quarter of the countries show no changes or are increasingly dependent on primary product exports.
Moreover, in analyzing this trend, it is important to examine the rate of change. The actual growth of industrial exports indicates a very diverse pattern in which over three quarters of the selected countries evidenced low to moderate growth and only slightly more than one fifth demonstrated substantial growth. In evaluating these growth figures, we must take account of the fact that most Third World countries started with very low base figures. Subsequent striking gains still leave many heavily dependent on primary commodities. Of the 20 countries showing substantial increases of non-primary exports, 13 still were heavily dependent (70 percent or more) on primary product exports. In only seven Third World countries do non-primary products account for more than 50 percent of the total (Hong Kong, India, Pakistan, South Korea, Taiwan, Haiti and Jamaica).
“New division” advocates have attempted to theorize about the Third World by focusing on these exceptional seven cases, and overlooking the particular strategic military and political positions that some of these countries (Hong Kong, South Korea and Taiwan) have occupied in the global confrontation between capitalist and socialist countries and the historical roots of national industrial development in others (India).
Moreover, industrial growth and diversification of exports has been stimulated by exports to non-metropolitan countries — quite the opposite of what “new division” theorists propose. For the more dynamic industrializing Third World countries, regional expansion is becoming much more central to their growth patterns. The trade patterns of the past are only partly evidenced in the destination of their exports. Among the low income Third World countries, exports to the non-metropolitan areas account for 37 percent and 34 percent in 1960 and 1976. Among the middle income Third World countries, there has been a shift upward from 29 percent to 33 percent in the proportion of industrial exports to non-metropolitan areas.
It is within this context of continuing dependence on primary commodities, with very selected industrial diversification, that a limited trend toward “a new international division of labor” should be discussed. By 1976, about 52 percent of the low income manufacturing exports and 64 percent of the middle income exports were going to the core capitalist countries. Among the more industrialized Third World countries, textiles and clothing accounted for 20 percent of Indian, 32 percent of Pakistani, 36 percent of South Korean, 30 percent of Taiwanese and 44 percent of Hong Kong’s industrial exports. The predominance of textiles and clothing suggests the quite fragile and limited nature of the industrial push, even in these, the most dynamic third world countries. The availability of cheap labor for labor intensive manufacturing is a major consideration in the advance of industry — but hardly a basis for sweeping assertions concerning a new international division of labor.
The “new division” theorists have obscured many of the fundamental issues that confront the Third World. Rather than seeing a new division of labor growing from the logic of industrial capital in the metropolitan countries, the real issue is the very limited opening of industrial markets in the metropole, the constraints on industrial financing, the construction of barriers to the transfer of technology, and so on. The “new division” school has demonstrated no capacity to analyze the class forces that shape state policy in the metropole and the real behavior of the multinational corporations. Operating from an abstract deductive model of capitalism, haphazardly selecting illustrative “cases” to buttress their arguments, they have failed to deal with the fact that over 90 percent of multinational industrial production in the major countries of Latin America is geared toward capturing the internal market. [3] Fixated on the Hong Kong, South Korea, Taiwan experience, they fail to come to grips with the major conflict between North and South over precisely the incapacity of Third World countries to break into new markets and the intransigence of the metropolitan countries in resisting the creation of a new international division of labor. What industrial exports have taken place is largely a result of the combined pressures of bourgeois Third World countries and limited sectors of metropolitan competitive capitalism (such as electronics and textiles). The “new division” theorists have been largely taken in by the rhetoric of Trilateral Commission position papers, which are not the operating basis on which the economic policies of the member nations are formulated.
The very terms with which the “new division” arguments are framed are suspect. The notion of “industrialization” means very different things in different settings. [4] In the metropolitan countries, it refers to the routinization of innovation, large-scale research and development, elaboration of machinery, processing, assembly, sales and shipping. In the periphery, “industrialization” refers to only elements — all of the technology is imported, as is much of the machinery and sales. Moreover, in many countries the location of industries is contingent on a specific set of social factors — low wages, no taxes, no strikes — which limit the “spread effects” of industrial development and could lead industry to pack up and abandon a country if their conditions changed. [5]
If one looks closer at the nature of Third World industrialization, one discovers that much of it is assembly plants, involving little industrial training and investment. Moreover, the growth in Southeast Asia, Mexico, Central America and the Caribbean of free trade zones in which the corporations, for all intents and purposes, exercise sovereignty in the areas of production means that the production is “national” only in the most vacuous, juridical sense: the operations, laws and production are in fact run by foreigners. Moreover, the fragmented nature of industrial production in most third world countries suggests that we are not dealing with integrated processes of production but with partial and limited production controlled and dependent on metropolitan forces.
Clearly, capitalism is transforming more and more of third world societies. Primary products are being subject to mechanization, transportation and commercial expansion is being promoted by the capitalist state and industrial processing of agro-mineral products is clearly on the ascent. Within the national political economy, industry is growing and primary goods production is declining. Proletarianization is accompanied and exceeded by the growth of a mass of semi-proletarian rural and urban labor pools with temporary and seasonal employment. Yet this industrial growth is overwhelmingly dependent on the continued growth of traditional exports to finance and sustain it. Moreover, the most dynamic growth sectors of industry are not only internal, but largely directed to the purchasers of durable goods, namely the 20 percent of the population found in the affluent middle and upper classes. The lack of a new international division of labor and the very dismal prospects of Third World countries achieving even 15 percent of world industrial exports by 1990 heightens the internal contradictions between a growing industrial capacity and ever-increasing surplus labor force uprooted from primary production. Rather than looking for a new division of labor, we can expect a new round of Third World labor-based social revolutions.
Endnotes
[1] See Folker Frobel, Jurgen Heinrichs and Otto Kreye, “The New International Division of Labor: Origins, Manifestations and Consequences,” (mimeo). Bill Warren, “Imperialism and Capitalist Industrialization,” New Left Review (September-October 1973). See also Martin Landsberg, “Export-Led Industrialization in the Third World: Manufacturing Imperialism,” Review of Radical Political Economics 2/4.
[2] World Bank Development Report (Washington, 1979).
[3] See James Petras, “Comment l’Amerique latine alimente la prosperite des Etats-Unis,” Le Monde Diplomatique, August 1979.
[4] Philip McMichael, James Petras and Robert Rhodes, “Industrialization in the Third World,” in James Petras, ed., Critical Perspectives on Imperialism and Social Class in the Third World (New York: Monthly Review Press, 1979), pp. 103-136.
[5] James Petras and Juan Manuel Carrion, “Contradictions of Colonial Industrialization and the Crises in Commonwealth Status: The Case of Puerto Rico,” in Petras, Critical Perspectives, pp. 253-270.
