Globalization of the Automobile Industry — Traditional Locations under Pressure?

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Globalization of the Automobile Industry — Traditional Locations under Pressure?

Author Info

Julius Spatz
Peter Nunnenkamp

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Julius Spatz

Abstract

Even though the automobile industry is technologically advanced, the increasing integration of low-income countries into the global division of labor has put competitive pressure on traditional automobile producing countries. New end-producers emerged in Asia, Latin America as well as Southern and Central Europe. In addition, the automobile industries of Germany, Japan and the United States engaged in outsourcing of relatively labor intensive segments of the value chain, especially on a regional level. Our analysis of the labor market effects of these developments supports the predictions of trade models: Low-skilled workers and labor intensive subsectors of the automobile industry in traditional locations suffered deteriorating wage and employment prospects in the process of globalization. The adjustment to fiercer competition from below differed considerably between Germany, Japan and the United States. Economic restructuring was least pronounced in the US automobile industry, largely due to the resistance of trade unions. As a result, the employment record and the world-market performance of US automobile producers turned out to be poor compared to their German and Japanese counterparts.

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1093.

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Length: 46 pages
Date of creation: Jan 2002
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Handle: RePEc:kie:kieliw:1093

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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment

References listed on IDEAS
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Jörg-Peter Weiß, 2000. "Die deutsche Automobilindustrie im internationalen Wettbewerb," Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 67(12), pages 168-173.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Peter Nunnenkamp, 2002. "Determinants of FDI in Developing Countries: Has Globalization Changed the Rules of the Game?," Kiel Working Papers 1122, Kiel Institute for the World Economy. [Downloadable!]
Jörg MAYER, 2004. "Industrialization In Developing Countries: Some Evidence From A New Economic Geography Perspective," UNCTAD Discussion Papers 174, United Nations Conference on Trade and Development. [Downloadable!]
Michael Fertig, 2003. "The Impact of Economic Integration on Employment – An Assessment in the Context of EU-Enlargement," RWI Discussion Papers 0007, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
Fertig, Michael, 2003. "The Impact of Economic Integration on Employment – An Assessment in the Context of EU Enlargement," IZA Discussion Papers 919, Institute for the Study of Labor (IZA). [Downloadable!]

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