The Changing International Division of Labor in Manufactured Goods
Author(s)
Balassa, Bela
Abstract
The changing pattern of the international division of labor in manufactured goods between developed and developing countries is examined. The export surplus in manufactured trade with LDCs (Least Developed Countries) increased from $36.3 to 96.8 billion between 1973 and 1977. All major industrial countries experienced an increase in their trade surplus in manufactured goods with the oil importing countries. Assuming this trend continues, the period 1976 to 1986 will see no net employment effects for the OECD (Organization for Economic Co-operation and Development) countries and a continuing shift of labor from low skill to high skill occupations. The upgrading of the labor force, as well as the exchange of physical and human capital for unskilled labor, would have favorable effects on resource allocation and economic growth in the developed countries. Liberal trade policies would provide significant advantages for the developed countries. This advantage is particularly true since the competing import industries of the developed countries may not experience job losses in absolute terms inasmuch as increased demand associated with economic growth leads to higher domestic consumption and production. Economic data are included.
