The new new international division of labour

The old story about the changing geography of production noted that, while labour-intensive production could be relocated from industrial areas of the ‘north’ to export processing zones or border towns in the ‘global south’, research and development (R&D) would stay in the ‘north’. So, part of the colonial division of labour was broken down by the emergence of production complexes in places such as South Korea or Mexico but, by-and-large, the more important functions in the production process (R&D, design, marketing, corporate headquarters, etc.) would stay in North American and Western Europe: it would be a new international division of labour (NIDL) but the key decisions and the best jobs would still be located in the rich world.

Now, as the New York Times reports, the shape of the NIDL might just be changing. Rather than keeping all its R&D in the U.S., for example, Applied Materials, “the world’s biggest supplier of the equipment used to make semiconductors, solar panels and flat-panel displays,” has built its newest and largest research lab in Xian, “a city about 600 miles southwest of Beijing [which has] 47 universities and other institutions of higher learning, churning out engineers with master’s degrees who can be hired for $730 a month.”

It’s not just cheap labour-power that attracts companies such as Applied Materials. Like the Irish Development Agency’s use of various enticements to pull inward investment to Ireland, cities such as Xian are doing their bit to grab a share of the investment pie. Indeed, “the Xian city government sold a 75-year land lease to Applied Materials at a deep discount and is reimbursing the company for roughly a quarter of the lab complex’s operating costs for five years” – nice deal for Applied Materials.

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