Question

1. What is meant by the “international division of labor”? What function does the periphery play vis-a-visthe center countries in this division of labor? Who benefits from it?
2. What are the problems faced by primary product exporters? Are there primary products that countries might export which would, perhaps, not be subject to the same difficulties? Can you give some examples of so-called non-traditional primary products which it might be desirable to export? In general, what makes one export a “good” export and another less desirable?

Answer 1

International division of labor means that a particular country specialize in a certain products or may be specialize in a particular production process. International division of labor occurs because of globalization. Production processes get transferred from developed to developing countries.

Periphery countries are less developed than the core countries ie the center countries.Periphery countries are usually exploited by center countries. Periphery countries lag behind due to poor technology, poor education system, poor health system, government which is not stable etc. Exploitation of periphery countries by center countries in terms of cheap labor ,natural resources help center countries. So globalization affects the world as developed countries specialize in production process which they pass to the developing countries.

Center countries benefit from such division of labor. The Periphery countries get exploited by the center countries and the center countries gain .The periphery countries are not able to make gain as it is not possible for them to industralize.

Primary products refer to agricultural goods and minerals .Problems with primary products export are reduction in the terms of trade, earnings from exports decline,improper linkages with other sectors and dutch disease.Terms of trade will move down as increasing amount of agricultural goods will be needed to pay for manufactured goods.Export earnings will be unstable due to unstable commodity prices.Again export oriented industries do not help domestic economy because agricultural plantations and mines may be owned by foreigners.So employment will be less and profits will be earned by foreigners.

Non traditional primary products like tropical fruits, green peas may not be subject to difficulties.

Non traditional export refer to products which are produced for domestic consumption but are later exported.Eg tropical fruits.

It is better to export goods in which the country has competitive adavantage so that the country can earn enough revenue.