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Globalization of the Automobile Industry ; Traditional Locations under Pressure?

  • Julius Spatz
  • Peter Nunnenkamp

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
Date of revision:
Handle: RePEc:kie:kieliw:1093
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  1. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-93.
  2. Nunnenkamp, Peter, 1998. "Die deutsche Automobilindustrie im Prozeß der Globalisierung," Open Access Publications from Kiel Institute for the World Economy 1790, Kiel Institute for the World Economy (IfW).
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  4. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
  5. Neven, Damien, 1995. "Trade liberalisation with Eastern nations: Some distribution issues," European Economic Review, Elsevier, vol. 39(3-4), pages 622-632, April.
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  7. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
  8. Bent Dalum & Keld Laursen & Gert Villumsen, 1998. "Structural Change in OECD Export Specialisation Patterns: de-specialisation and 'stickiness'," International Review of Applied Economics, Taylor & Francis Journals, vol. 12(3), pages 423-443.
  9. Jörg-Peter Weiß, 2000. "Die deutsche Automobilindustrie im internationalen Wettbewerb," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 67(12), pages 168-173.
  10. Markus Diehl, 2001. "International Trade in Intermediate Inputs: The Case of the Automobile Industry," Kiel Working Papers 1027, Kiel Institute for the World Economy.
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