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

PERI Working Paper No. 59

40 Pages Posted: 5 Aug 2003

See all articles by James Heintz

James Heintz

University of Massachusetts Amherst - Department of Political Science

Date Written: June 2003

Abstract

The institutional structure of global commodity chains and cross-border production networks will have a profound impact on how the benefits of globalized production are distributed. This paper develops a model that combines the insights of earlier unequal exchange theorists and new work on global commodity chains in order 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 brand-name 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.

Keywords: trade, global commodity chains, multinational corporations, subcontracting, branding, inequality

JEL Classification: F02, F23, O19

Suggested Citation

Heintz, James, The New Face of Unequal Exchange: Low-Wage Manufacturing, Commodity Chains, and Global Inequality (June 2003). PERI Working Paper No. 59, Available at SSRN: https://ssrn.com/abstract=427680 or http://dx.doi.org/10.2139/ssrn.427680

James Heintz (Contact Author)

University of Massachusetts Amherst - Department of Political Science ( email )

Thompson Hall
Amherst, MA 01003
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
375
Abstract Views
2,002
Rank
146,211
PlumX Metrics