Why Do Firms Disintegrate? Towards an Understanding of the Firm-level Decision to Subcontract and its Implications for Labor

Asad Sayeed and Radhika Balakrishnan

Chapter 5 in Labor and the Globalization of Production, 2004, pp 104-118 from Palgrave Macmillan

Abstract: Abstract The post cold-war global economy is characterized by the twin phenomena of disintegration of the production process and the integration of the world economy through trade (Feenstra, 1998). Although the phenomenon of disintegration of the production process has been observed over the last three decades, it has accelerated with trade and financial sector liberalization in the post cold-war world order. In this context, flexible production systems with vertical and at times horizontal disintegration are seen as increasingly profitable. This is especially true with regard to out-sourcing of production to developing countries. Korzeniewicz and Martin (1994) conceptualize this phenomenon as characterized by a new global division of labor.

Keywords: Transaction Cost; Minimum Wage; Informal Sector; Formal Sector; Unit Labor Cost (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-52396-8_5

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DOI: 10.1057/9780230523968_5

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