Global Investment Strategies and the Division of Labour

Foreign Investment Strategies

• Foreign Indirect Investment (Portfolio Investment): Specific assets and intermediate products transferred between two independent economic agents. In this instance, control over the resources is relinquished by the seller to the buyer, and only financial resources are transferred.
• Foreign Direct Investment (FDI): Investment made outside the home country of the investing company in which control over the resources transferred remains with the investor.

Corporate Integration Models

• Vertical Integration: When various stages of the production process are incorporated into one firm. This occurs because a corporation wants to ensure security of supply or reduce transaction costs. Example: BP may own oil wells in the Middle East and the petrol stations in the UK that sell the final product.
• Horizontal Integration: When a company makes the same product in many different countries. Example: Toyota has plants in the US and Europe to avoid protectionism and gain access to local markets.
• Conglomerate Integration: When a company produces many different product lines in a variety of countries. Example: P&G produces beauty, home, health, baby, and pet products, which allow it to diversify risk and make profits in many sectors.

The Global Division of Labour

The division of labour refers to the roles that people occupy in the production process. Different societies and economic systems have diverse ways of organizing who does which particular job (e.g., farmer societies have less specialization and more work to do, whereas urban societies have much more specialization and only one or two tasks to do).

Key Aspects of Labour Division

• The Gendered Division of Labour: A situation in which men tend to be grouped in different jobs from women. This gendered division is not preordained; it changes over time depending on social and economic circumstances. However, progress regarding the gendered division of labour is not advancing as fast as expected.
• The Racial and Ethnic Division of Labour: When groups of people from particular ethnic backgrounds or with visible physical differences are confined or corralled into specific forms of labour. The racial division is often used to justify the different legal status and economic exploitation of these groups of workers.

Changes in the Production Process

There have been two major developments in the division of labour. The way things are produced has gone through a number of changes, which influences how people fit into the work process: