Technical progress, organisational innovations and labour intensity

Coveri A., Zanfei A.

Coveri A., Pianta M.

Amongst the drivers of inequality, income distribution between wages and profits at the level of individual industries plays a key role. The factors shaping the parallel evolution of wages and profits are investigated in this article building on Post-Keynesian and evolutionary perspectives. We develop a simultaneous model on wage and profit dynamics identifying as key determinants the capital-labour conflict, the expansion of value added per hour worked, different strategies of technological change and offshoring, and the relevance of trade unions. The empirical investigation includes an industry-level analysis on 38 manufacturing and service sectors for six major European countries from 1994 to 2014. Wage and profit dynamics are shown to be rooted in structural change and capital-labour conflict, with profits driven by product innovation and offshoring, and wages rising faster where new products are relevant and trade unions have a greater role.

Garbellini N.

• International trade is often presented as the result of change of technique. • The main players are big OEMs at the head of global value chains. • Trade is part of cost-minimizing strategies: the result of choice of technique. • The paper argues that international trade patterns depend on absolute advantages. International trade is often presented as a game played by national states. If this is partially true, especially in the case of major countries, it is only a side of the coin. Changes in international trade patterns are therefore treated as the result of a change of technique process, taking place also due to international diffusion of technical knowledge. In fact, the main players are multinationals, or big OEMs at the head of Global Value Chains. Trade is an integral part of their cost-minimizing strategies: this is not a process of change of technique, but rather of choice of technique – which then determines change in technique. The objective of the present paper is to show how the structure of international trade depends not on comparative advantages, but rather on absolute advantages .

Timmer M.P., Miroudot S., de Vries G.J.

Production processes are fragmenting across borders with countries trading tasks rather than products. Export statistics based on value added reveal a process of vertical specialisation. Yet, what do countries do when exporting? In this article, we provide novel evidence on functional specialisation (FS) in trade. We find surprisingly large and pervasive heterogeneity in specialisation across countries. A positive (negative) correlation between GDP per capita and specialisation in R&D (fabrication) functions is documented. Specialisation in management and marketing functions is unrelated to income. We show how our approach can be easily extended to study FS in trade at the sub-national level. We argue that this is needed to better understand the potential for regional development under global integration.

Selwyn B.

The proliferation of global value chains is portrayed in academic and policy circles as representing new development opportunities for firms and regions in the global south. This article tests these claims by examining original material from non-governmental organizations’ reports and secondary sources on the garment and electronics chains in Cambodia and China, respectively. This empirical evidence suggests that these global value chains generate new forms of worker poverty. Based on these findings, the article proposes the novel Global Poverty Chain approach. The article critiques and reformulates principal concepts associated with the Global Value Chain approach – of value-added, rent and chain governance – and challenges a core assumption prevalent within Global Value Chain analysis: that workers’ low wages are a function of their employment in low productivity industries. Instead, it shows that (1) many supplier firms in the global south are as, or more, productive than their equivalents in the global north; (2) often predominantly female workers in these industries are super exploited (paid wages below their subsistence requirements) and (3) chain governance represents a lead firm value-capturing strategy, which intensifies worker exploitation.

Oztemel E., Gursev S.

Manufacturing industry profoundly impact economic and societal progress. As being a commonly accepted term for research centers and universities, the Industry 4.0 initiative has received a splendid attention of the business and research community. Although the idea is not new and was on the agenda of academic research in many years with different perceptions, the term “Industry 4.0” is just launched and well accepted to some extend not only in academic life but also in the industrial society as well. While academic research focuses on understanding and defining the concept and trying to develop related systems, business models and respective methodologies, industry, on the other hand, focuses its attention on the change of industrial machine suits and intelligent products as well as potential customers on this progress. It is therefore important for the companies to primarily understand the features and content of the Industry 4.0 for potential transformation from machine dominant manufacturing to digital manufacturing. In order to achieve a successful transformation, they should clearly review their positions and respective potentials against basic requirements set forward for Industry 4.0 standard. This will allow them to generate a well-defined road map. There has been several approaches and discussions going on along this line, a several road maps are already proposed. Some of those are reviewed in this paper. However, the literature clearly indicates the lack of respective assessment methodologies. Since the implementation and applications of related theorems and definitions outlined for the 4th industrial revolution is not mature enough for most of the reel life implementations, a systematic approach for making respective assessments and evaluations seems to be urgently required for those who are intending to speed this transformation up. It is now main responsibility of the research community to developed technological infrastructure with physical systems, management models, business models as well as some well-defined Industry 4.0 scenarios in order to make the life for the practitioners easy. It is estimated by the experts that the Industry 4.0 and related progress along this line will have an enormous effect on social life. As outlined in the introduction, some social transformation is also expected. It is assumed that the robots will be more dominant in manufacturing, implanted technologies, cooperating and coordinating machines, self-decision-making systems, autonom problem solvers, learning machines, 3D printing etc. will dominate the production process. Wearable internet, big data analysis, sensor based life, smart city implementations or similar applications will be the main concern of the community. This social transformation will naturally trigger the manufacturing society to improve their manufacturing suits to cope with the customer requirements and sustain competitive advantage. A summary of the potential progress along this line is reviewed in introduction of the paper. It is so obvious that the future manufacturing systems will have a different vision composed of products, intelligence, communications and information network. This will bring about new business models to be dominant in industrial life. Another important issue to take into account is that the time span of this so-called revolution will be so short triggering a continues transformation process to yield some new industrial areas to emerge. This clearly puts a big pressure on manufacturers to learn, understand, design and implement the transformation process. Since the main motivation for finding the best way to follow this transformation, a comprehensive literature review will generate a remarkable support. This paper presents such a review for highlighting the progress and aims to help improve the awareness on the best experiences. It is intended to provide a clear idea for those wishing to generate a road map for digitizing the respective manufacturing suits. By presenting this review it is also intended to provide a hands-on library of Industry 4.0 to both academics as well as industrial practitioners. The top 100 headings, abstracts and key words (i.e. a total of 619 publications of any kind) for each search term were independently analyzed in order to ensure the reliability of the review process. Note that, this exhaustive literature review provides a concrete definition of Industry 4.0 and defines its six design principles such as interoperability, virtualization, local, real-time talent, service orientation and modularity. It seems that these principles have taken the attention of the scientists to carry out more variety of research on the subject and to develop implementable and appropriate scenarios. A comprehensive taxonomy of Industry 4.0 can also be developed through analyzing the results of this review.

Guarascio D., Pianta M.

Amador J., Cabral S.

Global value chains (GVCs) emerged as the paradigm for the international organisation of production. For most goods and services production is nowadays vertically fragmented across different countries and this reality gave rise to a significant new strand of research in in ternational trade. This article starts by discussing the major driving forces of GVCs in recent decades. Next, it surveys the main measures of GVCs, accounting for their different scopes and required datasets. The artic le highlights the timing of the contributions to the literature, signalling their sequential nature and the trend towards more accurate and data-demanding indicators.

Werner M., Bair J., Fernández V.R.

Over the last decade, the global value chain (GVC) approach, with its associated notions of chain governance and firm upgrading, has proliferated as a mode of analysis and of intervention amongst development institutions. This article examines the adoption and adaptation of GVCs at four multilateral agenciesinordertounderstandthepurchaseofvaluechainapproacheswithin thedevelopmentfield.MixingGVC perspectiveswithothertheoreticalinfluencesandappliedpractices,theseinstitutionsdeployvaluechainframeworks to signal a new generation of policies that promise both to consolidate, and to advance beyond, the market fundamentalism of the Washington Consensus. To achieve this, value chain development frameworks craft interventions directed toward various constellations of firm and non-firm actors as a ‘third way’ between state-minimalist and state-coordinated approaches. The authors identify key adaptations of the GVC framework including an emphasis on value chain governance as an instrument to correct market failure in partnership with state and development agencies, and upgrading as a de facto tool for poverty reduction. They find that efforts are ongoing to construct a ‘post’ to the Washington Consensus and that the global value chain is enabling this process by providing a new language and new object of development intervention: ‘the chain’ and the local‐global linkages that comprise it.

Fernández V.R.

The global value chain (GVC) approach has become an increasingly relevant tool not only for the analysis of the current strategies of firms in global economic networks, but also for the economic development policies promoted by supranational institutions. The paper argues that this supranational institutionalization of such an approach has been contributing to legitimate a subordinated and exclusive pattern of integration to networks governed by the transnational fraction of capital rather than constituting a tool for enabling the strategies of developing countries and their actors. This is made possible through the transformation of the GVC into a neoliberal device for strategies implemented by global political networks as well as through the uncritical assimilation of a group of limitations in the GVC theoretical and methodological corpus, when those global political networks incorporate that theoretical approach. The paper concludes by suggesting the necessity of a new approach capable of overcoming the limitations of the GVC inspired policy prescriptions as a condition for forging global alternatives to neoliberal fast policies dominating the Global South.

Milberg W., Winkler D.

Outsourcing Economics has a double meaning. First, it is a book about the economics of outsourcing. Second, it examines the way that economists have understood globalization as a pure market phenomenon, and as a result have 'outsourced' the explanation of world economic forces to other disciplines. Markets are embedded in a set of institutions - labor, government, corporate, civil society, and household - that mold the power asymmetries that influence the distribution of the gains from globalization. In this book, William Milberg and Deborah Winkler propose an institutional theory of trade and development starting with the growth of global value chains - international networks of production that have restructured the global economy and its governance over the past twenty-five years. They find that offshoring leads to greater economic insecurity in industrialized countries that lack institutions supporting workers. They also find that offshoring allows firms to reduce domestic investment and focus on finance and short-run stock movements.

Baldwin R.

Mavroudeas S., Ioannides A.

Marx recognized two distinct but also interrelated processes of increasing surplus-value extraction: absolute and relative surplus-value. Both these processes hinge upon the duration, the intensity and the productivity of labour, albeit in different ways. The increase of the duration of labour is indisputably related to absolute surplus-value and the increase of labour productivity to relative surplus-value. However, there is controversy regarding the position of the intensity of labour. Marx's argument that it belongs to relative surplus-value is disputed by many Marxists. This paper argues that Marx's thesis is correct because the intensification of labour and the increase of its duration are ultimately two opposing trends and thus should not be coupled in the same concept.

Pasinetti L.L.

The author starts from Piero Sraffa's notion of subsystem, and from his own notion of vertically integrated sector, and goes on to a complete generalization to dynamic analysis. A production system is partitioned into a set of self-contained growing subsystems, each of which, compactly considered, is characterized by one single unit of consumption good at one extreme and one single labor coefficient at the other extreme (a vertically hyper-integrated sector). This logical construction is shown to possess remarkable analytical and normative properties, particularly suitable for dynamic analysis. Among these properties, a complete generalization is obtained of Ada m Smith's pure labor theory of value. Copyright 1988 by Oxford University Press.