Living in a globalised world
Living in a globalised world

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Living in a globalised world

1 From global factories over there …

1.1 Introduction

Looking back over the 1970s, it is perhaps hard now to appreciate just how dramatic were the changes to the global map of industry taking place at that time. As more and more of the world's industry shifted from the affluent nations to the poorer, less developed countries in search of a cheaper labour force, the global economic map had to be redrawn to take account of the borders crossed and the distances traversed by firms from wealthier countries seeking to generate higher profits by relocating their manufacturing and assembly operations elsewhere.

Among the many factors which heralded this global upheaval was the ability of firms to separate out routine industrial tasks from the rest of their business: to be able to divide the simple, low-paid work from the activities of research, marketing, administration, management, and so on. Much debated at the time among academics and politicians, this geographical separation of tasks was a real departure from what had gone before, where the economies of North America and Europe had manufactured almost everything, and the rest of the world, or what seemed like it, exported raw materials and foodstuffs to the industrial countries. Where before goods were made in one country, components were now increasingly drawn from across the globe before final assembly. To put a pair of trainers together, for example, may well have involved sourcing the rubber from one country, the air soles from a second, and the dyes from a third, with the finished article finally stitched together in factories elsewhere. Driven by North American and European firms, cheaper locations such as Hong Kong, Singapore, South Korea, Taiwan and Mexico became host, for the first time, to global factories: factories which produced goods, not for sale in their own local markets, but, and this is the main point, for re-export to the West.

Defining developed and developing countries

At the end of the colonial era, as many new nations gained independence, relative levels of economic development became an important criterion by which to distinguish between countries. The former colonial powers and wealthier parts of the world generally became known as advanced industrial, or developed, countries, while former colonies and poorer nations became known as less developed, or more positively, developing countries. Critics of the uneven distribution of wealth across the globe highlighted the role which wealth creation in some places had played in impoverishing poorer nations and, rather, described them as actively underdeveloped. The question as to whether economic change is developing or underdeveloping countries remains a vital issue, as the debate over sweatshops highlights.

Perhaps not surprisingly, curiosity about these ‘global factories’ revolved largely around questions of geography. Why over there rather than over here? Why cross such distances to produce what could be made at ‘home’? The advantages of a cheap labour force recruited and trained to produce what turned out to be a rather narrow range of consumer goods with limited technology or investment topped the list of responses. Low-cost locations, or more accurately low wages, offered a competitive edge in global markets much sought after by North American and European firms. Such an edge heralded the beginning of ‘offshore’ production and what, nowadays, has become known as global ‘outsourcing’.

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