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Globalization of the Automobile Industry ; Traditional Locations under Pressure?

Author

Listed:
  • Julius Spatz
  • Peter Nunnenkamp

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.

Suggested Citation

  • Julius Spatz & Peter Nunnenkamp, 2002. "Globalization of the Automobile Industry ; Traditional Locations under Pressure?," Kiel Working Papers 1093, Kiel Institute for the World Economy.
  • Handle: RePEc:kie:kieliw:1093
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    More about this item

    Keywords

    Competitive pressure; outsourcing; specialization profiles; revealed comparative advantages; relative wages; employment restructuring;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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