The new international division of labor reflects the growing importance of
A. vertical integration.
B. outsourcing
C. just-in-time inventory management.
D. new infrastructure.
E. access to raw materials.
The correct answer and explanation is:
The correct answer is B. outsourcing.
The new international division of labor refers to the way production processes have become increasingly globalized. In this context, outsourcing plays a key role. Outsourcing involves contracting out certain business functions or processes to third-party companies, often in different countries where labor may be cheaper or more specialized. This trend has grown as companies seek to reduce costs, improve efficiency, and focus on core competencies.
Historically, labor-intensive tasks were often performed in developed countries, where wages were higher, and specialized work was done in less developed countries. However, with technological advancements, companies can now source tasks such as customer service, IT support, and manufacturing from abroad. This shift is facilitated by the global communication and transportation networks that make it easier to manage operations across borders.
In this international division of labor, outsourcing leads to a specialization of labor where different regions or countries are responsible for different stages of production. For instance, a car might be designed and engineered in one country, its parts produced in another, and assembled in a third. This globalization of labor allows companies to maximize their efficiency and reduce costs, as they can take advantage of lower wages and specific regional expertise.
While outsourcing is a major factor, it should not be confused with other factors like vertical integration or just-in-time inventory management, which focus on controlling production within a single company. Similarly, access to raw materials or infrastructure, while important, does not directly pertain to the global distribution of labor as outsourcing does. In essence, outsourcing has become a cornerstone of the new international division of labor, reshaping how goods and services are produced and delivered around the world.