International division of labor

From CEOpedia | Management online
Revision as of 17:02, 1 December 2019 by Sw (talk | contribs) (Infobox update)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
International division of labor
See also

International division of labor is understood as a phenomenon of continuous involvement of national economies in exchange directed at international partners and the production process. This division was initiated already in the historical period and has been evolving since the 18th century. This phenomenon is a very important function in business activities, constituting a kind of evolution in the division of labor, it occurred at the moment when the level of assortment and quantity exceeded the degree of buyers' needs which was not satisfied.

Factors affecting IDL

Continuous production surplus in the countries has created the need for sales trade exceeding the national borders. In this way, the mechanism of international competition was launched and became an inseparable element determining the directions of the profession of production and exchange of specific countries. Surplus production exceeding the market needs of a given country were not, however, the main factor that would suffice to change the division of international labor and local trade into international exchange. An important factor influencing the emergence of international division of labor was also ensuring that the progressing quantities of goods were efficiently distributed even over long distances. The appropriate development of technical as well as organizational and economic infrastructure, which ensured ease and security in the regular movement of surplus goods, had an impact on the international division of labor. The development of technology has become one of the main reasons that drive the international division of labor.

Factors influencing the specialization of a given country in the international division of labor

  1. Structural factors - they decide about specialization first. They are associated, among others, with the natural wealth of a particular country, capital or work. Countries with large energy resources deal with the extraction and supply of international partners. Extensive areas of fertile soils with favorable geographical and climatic factors contributed to the export and production of food, as a result an economic group was created that combines raw materials and agriculture. This economy has definitely raised the level of prosperity and social development.
  1. Technical and technological factor - presents two very important effects. The first effect that currently plays the most important role is the creation of new products and markets for manufactured products, thanks to which it is possible to create new specializations. Another effect is an increase in efficiency that allows you to produce more. The increase in efficiency allows eliminating specialization barriers that result from natural conditions.
  1. Institutional factors - Among which the political system, treaties, economic policy and international agreements are most often mentioned. This factor is characterized by volatility and subjectivity, it will be favored by an open market economy system that will be appropriate for a democratic system.
  1. Economic factors - usually it is a short-term factor, it lasts while in the global economy the demand for various types of goods and services increases, this favors the development of the productive base and international turnover. International economies are part of the international division of labor, beginning when they increase imports, and as a result they export on a constantly increasing scale.

Internal and external factors shaping IDL:

In the case of internal factors, they make conditions specific to specific national economies dependent, when it comes to external factors, they present the impact of structural transformations of the global economy on the international development of the division of labor. The international division of labor is closely linked to the complementarity of economic structures as a match between two or more countries. Complementarity in the process approach is understood as a change that occurs as a result of technical, institutional, conjunctive and structural factors, it is also understood as the degree of reflection of the adjustment of economic structures over a given period of time.

Types of complementarity of structures

Inter-branch, including countries that have a diversified development of the economic and social level, significantly affecting differences in production resources, including natural resources, capital and labor. Mutual adjustment positively affects the turnover of manufacturing economic goods.

Intra-industry, takes place in countries with similar economic and social development, is motivated by the difference during factors of production. The result is the development of this intra-industry complementarity, which includes extensive subassemblies and components.

Global Economy in the 21st Century

The global economy is significantly created by international economic entities, such as supranational institutions, formal or informal organizations, and transnational corporations. Thanks to the dynamically developing economy and spreading technology, we can deal with an international division of labor.

Marginal import and export rates

These measures inform us about the share of imports or exports in each unit of GDP that is additional. The marginal import rate informs us how the imported absorbency of the economy will increase together with the growth rate of gross domestic product. These factors are influenced, among others, by: Production of goods produced in the country, among others, investment matching in a given country of goods, and in particular matching the demand for goods with investment structures. The main task is to perfectly match the structure. Another factor is the development of the economic level of a particular country. If the level is low and there is a rapid increase in the economic growth, the import marginal rate will increase very suddenly.