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The New Face of Unequal Exchange: Low-Wage Manufacturing, Commodity Chains, and Global Inequality

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  • James Heintz

Abstract

The institutional structure of global commodity chains and cross-border production networks has a profound impact on how the benefits of globalized production are distributed. This paper engages with this issue by developing a model that combines the insights of earlier unequal exchange theorists and new work on global commodity chains to clarify the distributive dynamics of the expansion of low-wage manufacturing in the developing world. In this framework, the ability of productivity-led development to raise employment incomes in low-wage manufacturing is constrained and depends on how the benefits of productivity improvements are captured – as lower prices for consumers or higher rents for brandname multinationals. In contrast, consumption-led growth in relatively affluent consumer markets will contribute to income convergence when demand for manufactured consumer imports is sufficiently income elastic. However, in the long-run, labor market, macroeconomic, and environmental constraints will likely compromise this form of export-led employment growth.

Suggested Citation

  • James Heintz, 2003. "The New Face of Unequal Exchange: Low-Wage Manufacturing, Commodity Chains, and Global Inequality," Working Papers wp59, Political Economy Research Institute, University of Massachusetts at Amherst.
    • Handle: RePEc:uma:periwp:wp59
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    Citations

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    Cited by:

    1. Elissa Braunstein, 2019. "Foreign direct investment and development from a gender perspective," Chapters, in: Jonathan Michie (ed.), The Handbook of Globalisation, Third Edition, chapter 10, pages 178-187, Edward Elgar Publishing.
    2. Bilge Erten, 2010. "Industrial Upgrading and Export Diversification: A Comparative Analysis of Economic Policies in Turkey and Malaysia," Working Papers id:2778, eSocialSciences.
    3. Seguino, Stephanie, 2007. "Is more mobility good?: Firm mobility and the low wage-low productivity trap," Structural Change and Economic Dynamics, Elsevier, vol. 18(1), pages 27-51, March.
    4. Mark ANNER, 2019. "Predatory purchasing practices in global apparel supply chains and the employment relations squeeze in the Indian garment export industry," International Labour Review, International Labour Organization, vol. 158(4), pages 705-727, December.
    5. Shahrukh Rafi Khan & Sajid Kazmi, 2008. "Value chains in the informal sector: income shares of home-based subcontracted workers in Pakistan," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(3), pages 339-352.
    6. Fabrice Nzepang & Saturnin Bertrand Nguenda Anya, 2022. "Effects of ICTs on the Terms of Trade of Sub-Saharan African Economies," Journal of African Trade, Springer, vol. 9(1), pages 107-119, December.

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