A New Stage In The Fragmentation Of Production: Economic and Social Implications For Development Countries

This paper deals with the implications on production activities, income distribution and institutional changes due to the significant changes taking place in the world economy. One of the more relevant characteristics of globalization in its productive and commercial aspect is the segmented organization of national and international production. A new feature of the present international division of labor is the participation of countries that opened recently to the world economy. This is the case of large countries such as China, India, countries of Eastern Europe, and Latin American ones, like Brazil, México.

The incorporation of these new actors in the global economic stage gives way to deep concerns, analyses and debates on the evolution of the economic specialization of developed countries and the industrialization strategies which are open to emerging ones.

Emerging countries have their own concerns regarding segmentation and the new trade model as it implies a great dependence to the MNCs in terms of markets, technology and organization. The new strategies require large investments to modify the structure of specialization and reduce production in sectors with price competition. They need institutions and incentives for the creation of knowledge and innovation.  Thus, this paper deals with the following questions. What institutional arrangements are needed in order to make possible the insertion of emerging countries in knowledge intensive activities with high value added? Are the implications concerning employment the same as those of the international trade of final products? Do the observed tendencies towards a more uneven distribution of income, in both developed and developing countries, arise from the interrelation of national labor markets? Does fragmentation increase the negative effects in the distribution of income? Which should be the new economic and social policies and the institutional changes?