Automation and industrialisation through global value chains: North Africa in the German automotive wiring harness industry

Shamel Azmeh, Huong Nguyen and Marlene Kuhn

Structural Change and Economic Dynamics, 2022, vol. 63, issue C, 125-138

Abstract: Debates on the impact of automation on the geography of production are intensifying. Automation, it is argued, will eliminate the comparative advantage of developing countries and drive processes of re-shoring. While some studies have examined this issue at a macro level, there is a need for further research into specific cases and specific global value chains (GVCs). This paper contributes to this discussion by examining the case of the German automotive wiring harness industry. This industry has passed through a phase of offshoring as German firms sought low-cost locations in Eastern Europe and North Africa. Today, German OEMs are pushing their suppliers to automate manufacturing and relocate closer to assembly production in Europe. Through research at the headquarters and in North Africa, we argue that dispersed global production is seen by German OEMs as an unsustainable and costly organisational and geographical fix that is necessitated by the slow progress of automation solutions and facilitated by the availability of low-cost labour within a logistically feasible geographical space. Through this case, we argue that automation represents a threat to the position of some developing countries in GVCs and highlight the need to move beyond the dichotomy of off-shoring/re-shoring into analysing how automation might drive restructuring of GVCs with varied outcomes in production locations.

Keywords: Automation; Global value chains; Automotive industry; North africa; Wiring harness (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:63:y:2022:i:c:p:125-138

DOI: 10.1016/j.strueco.2022.09.006

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