Industrialization Stages

International Division of Labor

• The International Division of Labor has four stages: Initial, Formation, Developing, and Deepening.
• The Industrial Revolution marked the transition from the Formation to the Developing stage.
• The third stage is characterized by the use of clean energy and specialization of products.

Characteristics of Each Stage

• The Initial stage is marked by primitive accumulation of capitalism.
• The Formation stage is characterized by rapid industrial productivity growth.
• The Developing stage is marked by the new international division of labor.
• The Deepening stage is characterized by decolonization.

Influencing Factors

• Social productivity is the determining factor of the International Division of Labor.
• Other factors include natural conditions, capital flow, and governmental action.

Types of International Division of Labor

• Vertical International Division of Labor: occurs between countries with different economy and technology levels.
• Horizontal International Division of Labor: occurs between countries with similar economic development levels.
• Mixed International Division of Labor: combines both vertical and horizontal division of labor.
• International Outsourcing: includes service outsourcing (ITO, BPO) and production outsourcing (OEM, ODM, OBM).

Pre-Classical International Division of Labor Theory: Mercantilism

• Definition: a trade theory that aims to accumulate financial wealth by encouraging exports and discouraging imports.
• Stages: Early Mercantilism (15th to mid-16th century) and Late Mercantilism (second half of 16th century to 17th century).
• Characteristics: currency balance theory, trade balance theory, and restrictions on imports and exports.
• Flaws: zero-sum game and the price-specie-flow mechanism.

Classical International Division of Labor Theory

• Absolute Advantage Theory: developed by Adam Smith, it states that nations should trade based on their production costs.
• Basis for trade: production cost differences.
• Example: UK and US trading wheat and cloth.

Comparative Advantage Theory

• Developed by David Ricardo, it extends the free trade argument and emphasizes the efficiency of resource utilization.
• Basis for trade: opportunity cost differences.
• Law of Comparative Advantage: the individual, firm, region, or country with the lowest opportunity cost of producing a particular good should specialize in producing that good.
• Example: Canada and Bolivia producing sweaters and chairs.

This quiz covers the different stages of industrialization, including the formation stage, developing stage, and deepening stage. It also explores the key technological advancements and economic changes that occurred during each stage.