The evolution of the developed countries and the industrial prospects of the third world

(1)

fi SoSO I

UNITED NATIONS

AFRICAN INSTITUTS FOR ECONOMIC DEVELOPMENT AND PLANNIÍ

CS/2796-J

UNITAR ^- IDEP CONFERENCE DAKAR ^- JULY 1977

THE EVOLUTION OF THE DEVELOPED COUNTRIES

AND THE

INDUSTRIAL PROSPECTS OF THE THIRD WORLD

NOVEMBER, 1977

(Provisional

text — please do not

quote)

(Daniel MALKIN)

i.

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CS/2796-y

Page 1

TH3 EVOLUTION OF THE DEVELOPED COUNTRIES AND TEE INDUSTRIAL PROSPECTS OF THIRD WORLD COUNTRIES

INTRODUC TIOR

The forms that will be taken by the international division of

labour will depend both on the way in whioh the developed

countries will

try to solve - individually and collectively - their growth

problems,

and on the development goals of the Third World countries ^as

well

as the strategies that they may follow.

The _purpose of this paper is to examine these possible forms

of

the international division of labour, primarily in the industrial field

and from the developed countries' point of view. This examination

will

be made in a dual perspective, and we will try, in conclusion, to

make

a synthesis of it.

The first perspective is that of the developed countries' strategies

(we

will oonsider mainly the most industrialized

OECD Countries).

These are the countries which have shaped the international division of

labour from the colonial period to the present through exchange, invest¬

ment and: the internationalization of productive capital. The evolution

of the IDL can only be understood by reference to that of the developed

economies and the transformation of their productive system, in terms of structure, especially as regards firms and sectors. This is more

especially true as these economies have had since the beginning of the 1970's, a depression aggravated by the oil crisis and whose solution

(or

the search for

solutions)

inevitably affects the world distribution

of industrial activities. To try to apprehend these

effects,

it is

important to bear in mind that this crisis affects the developed countries

not only as a group of interdependent economies: it also affects them individually and hence differentially according to the nature of their productive system in its internal consistence and in the relations it

maintain with foreign countries; it affects and destabilize the system

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Page 2. ^»

of relations that these economies maintain with one another. The international redeployment of industrial activities that the developed

countries will seek to promote through the strategies of their firms,

the policies of structural adjustment, the customs tariff policies

and the transformation of international institutions will no doubt need to take into consideration these three aspects of the crisis.

Thus, the first question for which it seems important to us to provide clarifying material, if not the answer, is the following;

- Taking into consideration the different forms of inter¬

national division of labour that were manifested historically

(and

which, at present, coexist and are

superposed),

what are the new forms that the developed countries can seek to promote within the framework of restored growth? How do these forms call into question the distribution of production and trade not only between industrialized countries .and those that are

not, but also between the industrialized countries themselves?

The second perspective is that of the

(various)

strategies of the developing countries, not as such, but in so far as they may be

opposed to the strategies pursued by the developed countries, or in

some cases, be complementary to them. He do not intend to make _any value judgement on a particular development choice displayed by Third World Countries and which is expressed de_ facto by choices- and forms

of internal resource allocation as well as by certain active or

passive forms in the international division of labour. The aim of this paper is rather to clarify, if not to answer a second question;

- What are the specific problems for the developed countries posed by the different development and, especially,

industrialization strategies proclaimed or implemented in

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es/2796-y

Page 3.

various Third. World Countries? Can one

highlight {in the

medium and long

run)

^on the one hand

the possibilities

of cooperation leading to

mutual advantages and,

on

the

l/

^•

other hand, the almost

inevitable confrontations.—

The dual perspective

that

we

envisage relates to specific

strategies of developed

and developing countries. These strategies

can only be understood

by reference to the various forms taken by

the international division of labour ^as

well

as

the various challenges

of it being manifested

at present. The outline that we propose is

therefore the following:

1. The forms of the

international division of labour in the

old international economic order.

Calling into question

the IDL.

What new IDL for the developed

countries?

What new IDL for Third World

countries? Repercussions on

the developed countries.

Conclusion.

2.

3.

4.

5.

■1/

We

note that the act of refraining from making a value judge¬

ment on the displayed development

strategies mu3t not make us

ignore the reality

of the economic and social structures of the

countries which seek to implement them.

The evolution of these

structures _may lead to the

questioning, diversion and even

abandonment of predefined

strategies.

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Page 4 ^f

1° ^~ The Forms of the International Division of Labour in the Old-

International Economic Order,

In this paper we do not intend to review the different

works

of theoretical or empirical nature devoted to the evolution

of the

international division of labour whether concerned with its foundations

«r its mechanisms.— We will confine ourselves to recalling the

different phases of the internationalization of capital

which

were superposed on each other rather than succeeding each

other, in order

to try to highlight the specific forms of international division

of

labour between centre and periphery on the one hand, and between

centre countries on the other hand, engendered by this evolution of

internationalization.

The internationalization of capital - and its concrete expression

in terms of the international division of labour - reflect both the gradual integration of countries characterized

by precapitalist modes

of production into the world

(capitalist)

market and

the transformation

of the hierarchical structure of productive systems within the

whole

of the developed

(capitalist)

countries. It can thus

be analysed

^as

an answer

(at

^the level of an enlarged

space),

in the

spheres of

circulation and production, to the constraints encountered by

developed

countries in their internal _process of capital accumulation.

Among the abundant literature, we mentions S. Amins "Le

Développeras

Inégal et l'Accumulation à l'échelle

mondiale*

^; W.

Andreffs "Profits

et Structures du Capitalisme Mondial"; A. Emmanuel: "L'échange Inégal"; A.G. Prank: "The Development of

Under-development";

H. Oiersh: The International Division of Labour: Problems and Perspectives"; Gresi: "La Division International du

Travail";

C.A. Michalet: "Le Capitalisme Mondial"; Ch. Palloix: "Les

Firmes Multinationales et le Procès d'Internationalisation", et

"L'Internationalisation du Capital: Eléments

Critiques".

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cs/2796-y

Page 5-

Thus, the three phases

of the internationalization of capital

commonly distinguished - namely

internationalization of commercial

capital, of ^money capital

and of productive capital

-

relate to

different problems of accumulation

in the centre countries

as

well

as to different processes of

integration of the periphery in the

world capitalist economy as regards

trade and production. Here again,

it should be emphasized that these three

phases did not really succeed

each other in time but have been in a way,

superposed

on

each other.

The first phase or

"stratum" originates in what has been called

the period of

extensive accumulation of the developed countries. This

accumulation was based, internally, on the

integration of labour coming

from non-capitalist sectors into

the capitalist mode of production

and externally on a preliminary

exploitation

^-

specialization of the

colonial perisphere mainly in terms

of agricultural

raw

materials

destined either for the reproduction

of labour

power

(food

raw

materials)

or for the emerging manufacturing

industry (textiles).

The second phase is

characterized by

money

capital investment in

the periphery, essentially

British capital which

was

invested in its

colonies or former colonies

(United

States, Canada,

Australia) but

also in Latin American countries. The slowness in the centre

countries,

of the integration proletariat into

the capitalist

way

of life, the

cyclical crises of linkage between

the producer and

consumer

goods

sectors have as a corollary the geographical

extension of the

area

of

accumulation backed by the national

bourgeoisies of

some

peripheral

countries.

The third phase is that which, in the

centre, corresponds both

to the process of intensive

accumulation (rapid technological progress,

development of relative surplus

value) with the constraints it imposes

at the level of labour supply and valorization

of overaccumulated capital

in centre countries. The internationalization of

productive capital

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Page 6.

*

and the extension of its geographical area of valorization partially

remove the constraints. The mechanisms of unequal exchange which range from foodstuffs to manufactured products make it possible to stifle

atbirth, the crises related to distribution in centre countries while at a world level the mechanisms of international valorization make it possible to postpone the deadlines of the overaccumulation crises.

This brief analysis of different phases of the internationaliza¬

tion of capital in spite of its extremely limited nature, enables us to describe the concrete forms of the international division of labour that have developed between centre and periphery on the ^one hand, and between eentre countries on the other hand.

Between centre and periphery, the specialization of the Third

World in the field of production of and trade in ^raw

materials

continues to characterize the international division of labour. In this connexion, the colonial model that assigns to developing

countries

the role of supplier of agricultural and mineral raw materials

(use

values _necessary to capitalist

development)

is far from being superseded

for the Third World taken as a whole. Some figures illustrate the

permanence, if hot the acceleration, of this process of exploiting

raw materials at level of production and trade.

Paul Bairoch was able to calculate that from 1913 to 1948 the growth of the mining industry

(fuel

plus mineral

ores)

^was

5-5%

^{pe^}

year, which is extremely high given the fact that the period considered

includes the depression of the 'Thirties. Prom

1948

to

1965*

the

. 1 /•

annual growth rates in extractive sector were around 3p.—'

J_/

Paul

Bairoch: Diagnositic de l'évolution économique du Tiers

Monde 19OO-I966, Gauthier-Villars, Paris 1967»

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Page 7-

Concerning trade,the importance of primary commodities has not

decreased significantly in spite of the growth of export

industrializa¬

tion in a number of developing countries.

TABLE 1

Share of primary products in the exports of developing countries

1253:1215

YEAR

1953 87.3

1958 ^87.7 ^, ^•

1965 82.4

1971 ^■ 74.8

1973 73.1

i

1975 ^• ^81.1

i »

Source: Paul Bairoch,.op. cit, for the

years 1953-1965» GATT, Le Commerce

Intèrnational 1974-1976.

The second phase of the internationalization of capital, such

as it was stimulated by centre countries supported by the emerging

national bourgeoisies

(oveh

^a ^long

period),

went in two directions.

The first was the continuation and expansion of mining exploitation

activities facilitated by the financing of an infrastructure

(especially

in the field of

transport)

which made possible

large-scale exploitation.

The almost complete liberalization of trade in raw materials,

the

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Page

8»

reduction of colonial preferences after the Second World

War and

successive decolonizations, the active role of the World Bank

in

financing infrastructures related to the

exploitation of mineral

resources largely explain, the predominant share of

extractive (and oil)

industries, until recently, in the direct

investments of the

developed countries

(essentially

the

USA)

in the

Third World. The

second direction is that which was initiated "by the wave of import,

substitution policies implemented in a certain number of

countries.

Very rapidly, these policies made possible the development of

direct

investment by multinational firms in a number of manufacturing sectors geared, owing to the very large income disparities,

satisfying the

demand of the social classes having the highest incomes and whose consumption pattern is the closest to that of the centre

countries.

Such investments had the advantage of starting a flow of capital

goods from developed countries towards some of the peripheral

countries

which, in some cases, was a considerable restraint on the local

development of a producer's goods industry. The inherent limits of

the model of import substitution industrialization are sufficiently

well known for us riot to revert to them here. It is sufficient to emphasize the nature of the international specialization which this

model implies and the difficulties which may be encountered by the

countries which, having embarked on it, are trying to supersede it.

We will return to this point in the sections devoted to the questioning

of the old IDL

(il)

^{and the} ^new forms which some developing countries

are seeking to promote

(iv).

The most recent phase of the internationalization of capital is

the one which, under the aegis of multinational firms, gave rise to

what has been called

(C.A. Michelet)

^the ^system of the world economy.

What is new here is not so much the expansion of multinational firms ^-

an old phenomenon which already accompanied the previously-mentioned

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Page 9.

phases of internationalization, it is above all the form given to the internationalization of productive capital by the integration

of the peripheral productive systems into the world capitalist economy both at the level of international trade and of production. This gradual integration which some developing countries seem to have accepted while others are forced to do so, is essentially reflected in ^a vertical segmentation of production processes which leads Third

World industrialization towards a pronounced dépendance on the world market and, especially on the market of the developed capitalist

countries. The extremely rapid development of international sub¬

contracting implemented by the United States, and then Japan, followed by other industrialized countries, is the most significant form of

this integration which tends to specialize the developed countries in the production and export of producer's goods and the developing

countries in the production and export of final goods and'components

or spare parts characterized by the importance of the labour factor

in production costs. But this form, although the most visible and

most evident,.is not the only one: it is not only at the level of international specialization that the effects of the international division of labour may be apprehended. Some countries which, are

trying to withdraw from an export industrialization which is too dependent on the final consumer markets of developed countries, by embarking on the development of capital or intermediate goods industries mainly destined for the local market, find themselves

confronted with constraints that are either technological or related

to problems of selling on the world market a part of their produc¬

tion when they cannot sell it in their own economy because of sectoral imbalances which can only be surmounted over a long period.

While the concrete forms of international division of labour between centre and periphery can be relatively clearly identified

as regards specializations, international exchange, and the trans¬

formation of the productive systems of developing countries, it is

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Page 10.

not always the same for the division of labour between centre countries.

The reasons are, moreover, evident. Firstly, ^as regards trade, the

mechanisms of specialisation between developed countries are obviously

different from those which exist between developed and developing

countries. Specialisation is indeed, for regions which have reached comparable levels of industrialisation, an intra-branch phenomenon and exportation there is frequently conceived as only an international extension of production destined to satisfy internal needs. Secondly,

within the developed world the relative homogenisation of techniques and modes of production makes it more difficult, if one confines one¬

self to the economic sphere, to understand the mechanisms of dépendance and differentiate dynamics of productive systems. Staying within the

framework of an empirical analysis, it must however be achnowledged

that behind the apparent homogeneity of developed countries, and their interdependence at the intra-sectorial level, is in fact, a certain hierarchy of productive systems which is reflected in a division of labour internal to the developed countries. This hierarchy and this

division appear most clearly at the level of sectors that are the. source

of the transformation of relations of accumulation, that is, the sectors of producer's goods, or more precisely, sectors of producer's goods for producer's goods. The technical and economic domination in these sectors makes it possible to determine the conditions for the evolution of productivity in the other sectors of the economy and thus, more generally the relations of accumulation. The sectors

covering particularly machine-tools, automation, and electronic systems

are, at present, dominated by the United States, the Federal Republic

of Germany, and Japan. In this way a division of labour appears, with¬

in the developed countries, which reflects, in a way, a sectorial

hierarchy. For the most advanced countries, the space for the valoriza¬

tion of producer's goods located at the highest level of the hierarchy has _gone beyond the national space and reached the rest of the

«

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Page 11.

industrialized world, as well as the developing countries. The other countries which do not have an equally extensive control in these sectors are less able, therefore, to entirely control their own relations of accumulation and thus are induced to launch into more

dependent specialization. As we will _see, this creation of a hierarchy

within the developed countries has an effect on the different views

concerning the forms of industrialization of the Third World which are

likely to be established.

II - Calling into question the old ODL.

The international economic order gradually established shortly

after the Second World War enabled, without a major crisis up to the beginning of the 1970's an unprecendented expansion of the developed economies, a very rapid growth of international trade as well as the industrial development of ^a number of Third World'countries, especially

those which had geared their industrialization to the growth of

demand from developed countries ôr those which, owing to their natural resources, the size of their economy, or the internal change in social relations, had been able to embark ôn â process of internal accumula¬

tion.

This phase of growth ^- of course differentiated - through the

deep-seated*economic,

^social .and even political changes that it

instigated or accompanied, engendered a number of problems or conflicts which contributed to the questioning on several fronts of the forms of IDL evolved during the quarter century which followed the Second World War. The main phenomena to which we will attempt to relate

this calling into question of the international division of labour

are;

(ï)

the structural aspects of the crisis experienced by the developed countries as a whole;

(2)

the evolution of the power re¬

lations within the developed countries;

(3)

the limits and obstacles which the development of Third World countries faces particularly in the industrial field.

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Page 12.

*

II. 1. Structural aspects of the crisis

The rapid expansion

experienced "by developed countries with

market economies ^was marked "by a sustained

effort of capital formation

which explains the need for

each country to maintain

or

reinforce its

competitive position ^on the

international market for industrial products.

The struggle to maintain

competitive, positions in

a

period of growth led

to phenomena of

concentration,

even

the creation of oligopolies in a

number of branches. This oligopolistic competition

and the moderniza¬

tion of production processes in a

number of sectors

are no

doubt the

origin of

over-accumulation

of source

capital, in the medium term, of

decrease in the profitability of capital

(increase in the organic

composition not compensated by

productivity gains in the economy as a whole),

and the creation of

surplus production capacities. The energy

crisis struck head-on the economies marked by

falling

rates

of profit

and lar^e-scale debtedness of

firms, thereby contributing to the

acceleration of inflation and unemployment, and,

for most countries,

a worsening of the balance of payments

deficit. Thus, for the whole of

developed countries, the major

problem

is

the seaich for

^new

basis

for capital accumulation, for

geographical enlargement of the

area

of

capital valorization which,

by restoring the rate of profit,

can re¬

start growth and attenuate distribution

problems which

are

raised

among them. It is true that this search

is first and foremost internal

f,or the developed^ countries:

investments in sectors likely to favour

growth

(telecommunications,

^energy

in).,

^.

technological developments

likely to increase productivity

significantly. But, and this is what

interests us here, it also leads to questioning

the present IDL be¬

cause of the need mentioned above to widen the

geographical bases

for accumulation and valorization of capital,

multinational firms

are qiiite obviously the privileged vectors

of this widening, essentially

in two direction. The first is that of the transfer, in certain developed countries, of activities whose

rate of profit in centre

countries is heavily encùmbëred by labour costs.

The second is

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Page

that which, in basic sectors such as iron and steel or petrochemicals,

associates with a devalorization in centre countries a valorization in periphery countries. By virtue of this,the participation of multi¬

national firms in the development of basic industries in developing

countries such as Brazil or Iran, can be interpreted as support for the formation of a wider base of accumulation which makes it possible, by the constitution of ^a wider market, to support the capital goods

sector of the developed countries. In short, the calling into

question of the IDL by developed countries taken as a whole corresponds

with a disal necessity:

(1.)

to restore profit rates by more extensively bringing into play the mechanisms of unequal exchange,—1/ essentially

in the labour intensive industries; (2) to widen the geographical

base for accumulation by being associated in certain Third World Countries with the development of basic industries consuming capital goods which, in the centre countries are or may be faced with ^con¬

straints of surplus production capacity.

II. 2. The evolution of relations between developed countries It is quite evident that this analysis, for the whole of the developed capitalist economics, remains abstract owing to the very fact that it ignores the relative situations of these economies, on the one hand, in relation to each other, and on the other hand in relation to the developing countries which would be the most concerned by promotion of new forms of IDL most likely to contribute to the

solution of the crisis. Two questions arise here: firstly the cohesion

of the western world whose evolution during the period of growth

was accompanied ".y a change in the internal balance of power; and secondly the economic or socio-political constraints that may exist in

a particular developed country inducing it to resist or oppose the establishment of these raw forms of international division of labour.

y In

the ^sense that difference in wages rates are greater than in rates of productivity.

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Page 14-

The first question the cohesion of the western world,

is related

to the maintaining of the pre-eminence of the United

States

or on

the

contrary, to the evolution towards what one

could call

a

multipolar

world in which this pre-eminence would he replaced hy

much

more

balanced power relations between the United States,

Turope and Japan,

The major points of tension among the three

blocs

aoncern

technology,

shares of markets, relations with developing

countries,

and

the

manage- 1

/

ment of the monetary system. It may be thought— that,

if

American

leadership was maintained, it is the path of the

integration of developing

countries within the world market by promoting export, industries

which

would be favored at the expense of the geographical

extension of the

bases accumulation, the latter being, in fact,

related in

^a way

to

the oligopolistic competition of the three blocs none

of which would

dominate the others.

The second question has to do with the economic or

socio-politioal

constraints existing in certain developed countries,

which

may

give

rise to resistence to the structural changes necessary for setting ^up

a new international division of labour which better corresponds to the

whole of the western world's interests whatever the nature of relations

between the component blocs.

(American

domination or

multinationalism).

Because of the hierarchy

of

productive system within the

developed

countries which we mentioned above, these countries are ..far

from deriving

the same advantages from a liberalization of trade

with developing

countries, just as they will not -all benefit to the ^same

extent from

an oligopolistic competition in the

expanding sectors. Thus the setting-up

of new forms of international division of labour may be strongly opposed by certain countries who would bear the most adverse

effects. One

may even wonder to'what extent certain

protectionist

trends

which

are being manifested may lead to a "regression" in

relation

to

the existing

_1J This is in particular, the thesis developed in the GREST Study

cited above.

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CS/2796-y

Page 15

international division which could, in time, slow

down the integra¬

tion of the developing countries into

the world market.

II.3. The challenge to the system by

the developing countries

The challenges to the present forms

of the international division

of industrial labour by the developing countries

is manifested at

several levels but may be summarized in one

basic questions if

industrialization is a necessary stage in the process

of development,

what are the constraints now encountered by the Third

World, because

of its concrete insertion in the IDL, on committing

itself to

^a

less

dependant process of

development (in terms of export markets, capital

transfers and

technology)?

During the last twenty years,

the industrial growth of the Third

World as a whole, all sectors combined, was

relatively high (Table 2)

TABLE 2

Annual growth rate of the

industrial production of developed

countries with market economies

(DCME)

of

developing countries

UDCs in value added, 1958-1973»

:

. Regions 1958-1963 1963-1968 1968-1973

«

•

: DCME

: UDC

«

•

6.8

i

6.1

6.6 8.7

5»9 8.4

This growth, however, did not

enable the developing countries

to increase significantly their share in

world industrial production

which rose from

7»3%

ⁱⁿ 1958 only to

7.6% in 1973 (4 countries alone,

ensure, more than half of this

productions Brazil, Mexico, Argentina

and

India).

(17)

Page 16.

Moreover, it should be emphasized that this share is still considerably smaller in the sector of capital goods which contribute the most to the process of capital accumulation. Por these sectors,

the share of the UDCs in world production rose from

2.8/

in 1963 to

3.2%

in 1970> with an important part of this increase being due to the- development of sub-contracting which is carried out in the sector under the aegis of multinational firms.

A first basic criticism of the forms taken by the- internationalizati of production is therefore related to the inadequacy of'the

worid

"

distribution of industry which leaves the Third World with too Small

a share. The Lima Declaration which demands for the Third World

25/

of

the industrial production without clearly specifying the strategies to

be implemented to arrive at this result falls within this perspective

of distribution.

A second set of criticisms refers to trade. In the first place,

as was recalled above, the share of raw materials within the whole of Third World exports is enormous and, in addition virtually stationary

in time. This situation reflects a specialization which impedes the

progress of industrialization, especially owing to the structure of

customs tariffs that are practically non-existant for mineral re¬

sources and appreciably higher for manufactured products. The

sectorial disparity, in tariffs is worsened because the customs duties for manufactured products ooming from developing countries are higher than those which affect the same products coming from industrialized

/ Aj

countries -

(tables

3 and

4)»—

\J These tables

are extracted from A. Grjebine

"La Specialisation

Internationales Coûts Probables _pour les--Pays Industrialisés",

roneoed documents Direction-de la Prévision, Paris, 1976. This

document was published in a condensed form in the Revue du Tiers Monde, April-June, 1977-

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Page 17.

TABLE 3

Rates of protection for some branches

in selected developed countries

(1973)

•

sCountries

Ores 5 Iron &. Steel

Metallurgy Capital goods

•

Textiles

«

•

nr

( a)5

^ar

( a)

^nr ^' ^ar

•

ni

•

ar nr ar

u

•

8

USA s 1.5 : -0= 7

!

5.4: 5.9 12.4 17.9 ^32.4 ^: ^32.4

1

EEc(b)

^*• 0.3

S-2.1/-0.4 !

^3.8S 4, 7-6 ^8.4 ^:103 ^9-12, 1 15.5 :24s 2-27s

4*

japan * :

-ï

0.5 : -4.6

:

8.1; 10.9

• ft

11.4 ï 12 18.8 ^: 47.6

•

(a)

tn : nominal rate ? ar ; actual rate

(b)

The actual rates vary according to the countries of the

eecj the two figures indicating the highest and lowest rates.

Sources Agence Européenne d'Information, 1975»

table 4

Comparison of the average nominal' and actual rates of protection applied by developed countries to the whole of their imports of

manufactured products

(a)

^and to manufactured products from

UDCs

(b).

«

f

«

0 Nominal rates

•

Actual rates ^•⁰

•

Before the

* Kennedy Round

: A

10.9 :

«

B

0

•

17. 1 ;

a/b

ft

1.6 ^.

A B

: :

19.2 j 33.3 _,

A/B *

•

1.7 ;

After the

: Kennedy Round'

• •

:

^

^•

5

^;

•

11.8

•

1.8 ^.

• «

• •

11.1 •^. 22.6

•

2.0 _• t Source: UMBO, 1974»

(19)

Page

18.

Furthermore, the system of generalized

preference implemented

after 1964 to promote the exports

of manufactured products from

developing countries is still far from

having fulfilled its promises.

It has been

calculated—^

^that ⁱⁿ ¹⁹⁷¹ ^only

4J

of the exports of

developing countries benefited from the GSP

($960 million). Again, the

numerous safeguard clauses written in to

protect sensitive products

discourage investment in the export industries.

In the second place, it should be emphasized

that although the

share of the developing countries in world exports of

manufactured

products has somewhat increased since then,

during the last two

decades, the sectorial and geographical structure

of these exports,

except in a very

limited

number of countries

whose example is proving

to be not easily generalized, has not been of such a

kind

as

to

modify the relations of Third World

dépendance

on.

the developed

countries.

TABLE 5

Evolution of the share of UDCs in the World exports

of manufactured goods

(1963-1975)

: :: Hon :Iron

, ferrous ^. and

• • •

metals Steel

Chemical :Capital !Road products .goods .vehicles

Textiles

&

clothing

Other

manuf. Total «

:

: 1963 :

29.9/o

:

1.9/ ^4.15/

^: ^1.

14/

^:

0.04/ ^15.23/ ^6.91/ ^5.69/ *

: 1970 :

29.1/

^;

3.23/ 3.95/

^:2.

17/

:

0.02/ ^17.45/ ^9.59/ ^6.59/ 8

: 1974 :

27.5/ :3-45/

^5.8

/

^:4-

19/

:

0.07/

^22.8

^/

^10.7

^/ ^7.94/ 8

s 1975 : - •

• •

• ;

7.2

/ 1

:

Source: GATT

_1J T. Murray: "How helpful is the GSP to developing countries",

Economic Journal, May—June, 1973.

(20)

os/2796-y

Page 19« ^*

TABLE 6

World distribution of the trade in

manufactured

products in value

(billions of dollars) and in

value

(billions

of

dollars) and in

percentage in relation

to the 1974

world total

: Destin.

Origin

: D C

# 0

M E U D C Socialist :

countries ₀ Total :

o

• 0

>

Value

:

$

^Value

^! $

^Value

$

^Value

1°

:

: DOME ¹ 276.2 57.1 84.56 17.5 ^21.02 ^4.3

!

396.73 ^82.0

:

UDCs

*

22.85 4.7 10.38 ^2.1 1.24 0.26* 38.45 7-9

Socialist

: countries

0

: 8.92 ^1.8 6.05 ^1.2 27° 69

0

#

5.7 : 42.85 8.9

5

: Total

•

: 313.99

0 0

64.9 :102.56

0 0

21.2 50.01 10.3 : 483.76 ¹⁰⁰

f•

Source: GATT 1976.

The fact that it is the manufactured products which, within

the total exportsj had the most rapid growth

(22.6$

annual rate

between 1965 and 1973 as against

14.6$

for all

exports)

did not prevent,

as tables 5 and 6 show, either the persistence of a sectoral imbalance undoubtedly harmful to the widening of the internal industrial base,

or the persistence of the weakness of trade'relations inside the developing countries

(2.1$

of world trade in manufactured

products).

Lastly, and still in connexion with trade, some developing countries

are calling into question the specific forms according to which the

international division of labour is organized, particularly by the

(21)

CS/2796-7

Page 20,

multinational firms. What is being questioned here is not foreign

investment as such, but the narrow special specialization in which

it often confines developing countries within the fragmented processes of production on a world scale. Indeed, this type of specialization

goes beyond the multinational firms, because the sub-contracting industry can be and has been developed by national capital in developing

countries—^.

^With ^rare ^exceptions

^(Formosa

^and

^the

Republic of Korea for

example),

it has hardly contributed to the

2

/

development of capital goods industries.-^

Finally, ^a last aspect of the questioning of the forms of

specialization to which the present international division of labour

leads is related to the maintenance of financial dépendance. Without going into questions of stabilization, or even of indexation of

the prices of raw materials which go beyond the scope of this paper and which _may help to attenuate this dépendance it is appropriate

to emphasize the vicious circle constituted for a number of

developing

òóúntries, by the cycle: indebtedness - need for export

earnings

- industrialization geared the markets of developed countries ^- recourse to capital goods imports - indebtedness. The current deficit of the

non oil-exporting developing countries was around $30 billion in

1976,

while the level of debt was estimated at $180 billion and the capital

necessary for paying off this debt was annually around $12.5 billion.

The remainder of these figures, alone, is enough to give an idea of

jj ^See

^on

this subject G.K. Helleiner "Manufactured, exports from

less developed countries and multinational

firms", Economie

Journal, March 1973> and G. Adam:

"Multinational Corporations

and Worldwide Sourcing" in International Firms and

Modern

Imperialism", H. Radice ed. Fenguin,

1975»

2/

^Cf. ^on ^this subject: Alice H. Amsden: The Division

of Labour

is limited by the type of market: The case of the

Taiwanese

Machine-Tool in Industry", World Development, March

1977»

(22)

CS/2796-y#

Page 21

the constraints with Third World

countries

are

confronted in the

choice .of their development strategy, as

well

as

explaining the

need felt by some of them to escape

from

an

international division

of labour which they think only

strengthens these constraints.

III. What New

International Division(s) of Labour For the

Developed Countries?

As we have ^seen above (II.1 and

II.2),

the

structural aspects

of the crisis experienced by the

developed countries

causes

them to

undergo or seek to

implement, together

or

individually, a certain

number of changes in their

industrial structures, the repercussions

of which, being situated on the

world level, thereby affect the

international division of labour. We will trade

the question raised

in this section (what new ID(s)L for the developed

countries) under

three aspects:

(1) structural changes and industrial restructuration

(2) differences of situation hnd divergence

of interests

among

developed countries;

(3)

forms of

cooperation and possible conflicts

\

HI.I.Structural changes and

Industrial Restructuration

The growth experienced by the

developed countries in the post¬

war period up to the end of the

sixties is largely explained by the

favourable conditions for intensive capital accumulation.

More

specifically, these favaourable

conditions

mean

that the technical

progress which took place in the

sectors' óf producer's goods and

consumer good:< led to increases

in productivity, especially in the

sectors of intermediate goods and consumer

goods. As long

as

the

connection between :these three sectors functioned

satisfactorily,

i.e. as long as the progress in

productivity engendered in the

source industrial could spread to the

forward linkages, especially

by the continuous

generalization of continuous production pro¬

cess in the sector of intermediate goods and in

the growing auto¬

mation in the sector of mass consul er goods, the