What are ‘world market factories?’

According to feminist scholar Diane Elston, these are factories that are producing exclusively for export to rich countries. They are places where, often times, corporations have transplanted their production facilities, in search of cheaper combinations of land, labor and capital.

What are ‘free trade zones?’

These are areas deemed to be outside of the customs border and where the valid regulations related to foreign trade and other financial and economic areas are either not applicable or only partially applicable. Free trade zones are designed to increase trade volume and export–they facilitate and enable ‘free trade,’ usually between countries of the North and South.

Generally, in free trade zones:

• No duty is ever paid on re-exported merchandise (a real bargain for the owners of factories in these zones, one of the incentives to attract investment and industry)
• If the merchandise is sold domestically, no duty is paid until it leaves the zone or the zones (there are often penalties for domestic consumption. In other words, the goods were not intended for purchase by the people who made them in factories)

With less and less barriers to trade, again facilitated by institutions such as the World Bank and IMF (they have lots of leverage in extending credit lines to other countries), with lowered tariffs (import taxes), even free trade zones are less common. Put another way, whole countries are becoming de facto free trade zones.

Is factory ownership important?

There are three general ownership categories for these factories:

1. They are owned by indigenous capitalists (tough to come up with the investment capital, though)
2. They are a wholly-owned subsidiary (easy to get investment capital, control comes from the multinational’s home office)
3. They are a joint venture between a multinational and indigenous capitalists (issue of control is less certain)

What are some advantages and disadvantages of these arrangements?

• Most commonly, companies seek to subcontract with overseas customers (in other words, they don’t own the factories–they just contract).
• Multinationals can be even more mobile this way. Or at least labor and capital are more mobile. For instance, an epidemic like SARS comes along, and a company can pull out of an area quickly, without losing a large amount of investment capital.
• This is less politically sensitive. These companies aren’t coming in and buying the country, taking land–they’re merely ‘contracting!’ This is advantageous for the governments, who don’t appear to be appropriating citizens’ property and auctioning it off to private enterprise. And it is advantageous to the corporation, for reasons stated. Why kill the cow if you can get the milk for free?

There are pros and cons to multinational investment vs the development of a class of indigenous entrepreneurs (which would seem to be more consistent with a real development strategy).

• The multinationals may take their profits elsewhere, especially if the country lacks political stability. The locals may be more likely to re-invest them in the economy. The latter may have difficulty competing with corporations, though.
• There is also a process of increasing automation that takes place in some industries, and there is no assurance the machinery replacing workers is manufactured domestically.
• There is evidence that the longer a company stays in a country, the more linkages it makes with the local economy–purchasing more of its inputs locally, working with more local producers, suppliers, etc. This can stimulate industry in countries, but remember that it is dependent on the presence of the multinationals’ operations.
• In terms of how employers treat women, multinationals tend to pay better, and working conditions tend to be better–we would expect they would prefer employment with multinationals over the locals (think of working at WalMart versus a local store trying to compete with WalMart. They both pay low wages, but WalMart can find savings elsewhere while in the process of eliminating competition).

Does factory work escape patriarchal influences?

As for women, there seems to be little correlation between productivity and wage. Third World women are thus probably one of the most exploited classes of workers, in terms of their high output and low wages. This is capitalism in action, yes, but it’s also patriarchy–the women often have a subordinate position in the labor market. However, what if the women working in these factories were doing something else–transplanting rice, or working the informal sector in a sprawling third world city? Urban women may be better able to leave the household, delay marriage and childbearing, increase incomes, be more mobile, economically autonomous, and essentially have expanded the range of economic choices available to them. It’s an interesting paradox–they’re better off, no doubt, but still badly exploited.

It is a long process for women to move from unskilled labor-intensive positions into those areas requiring management or other professional skills, but it’s likely happening in some countries (in many cases, they may be replacing men who’ve taken higher positions … ).

Thus there may be two major forces at work: capitalism, which confers advantages on owners of capital at the expense of workers; and patriarchy, which provides men with advantages in the labor market. Think of the system of privilege concept. The forces of global capitalism will be difficult for weak governments to address.

However, women simply getting out into the formal workforce, exploited or no, may be as much of an impetus for social change as social movements calling for better working conditions. Such political movements, while pretty easy to understand and justify, may threaten the capitalistic enterprise and, where labor and capital roam the globe relatively freely, may lead companies to bypass some areas in their ongoing efforts to scour the globe looking for bargains and cheap labor.

Women’s labor and productivity

Managers may make several stereotyped assumptions when hiring women:

• Women are nimble-fingered. Well, actually, these are learned skills, largely as the result of division of labor in households (they can learn other skills, in other words, besides working sewing machines)
• Women are more docile (in a patriarchy . . . with gendered institutions with which they’re unfamiliar). Women essentially learn how to be submissive, but it’s likely more of a self-preservation instinct when in the company of men than an unthinking behavior.
• Women are more productive than men (division of labor makes such comparisons hard)
• Women will work for less–they don’t ‘need’ the job, they’re not the breadwinners. In fact women are often sent to work by their family, to increase their household’s income. That is, even single women are often working for several more people at home.

Women get jobs, yes, the lucky ones. But their working conditions are often poor, they may learn few transferable skills (therefore their value doesn’t increase over time and they’re easily replaceable), their labor depends on an influx of foreign capital, technology, skills, inputs and markets. If this doesn’t sound like development–it isn’t. It’s the spread of global capitalism, which often works at odds with development.

How factories gain from employing women

• They generally pay them lower wages (even when they’re working for several others, mothers and daughters)
• The free labor they may provide–some factories require a ‘trial period’
• Women are in a sense ‘pre-trained’ by a lifetime of work experience (company saves training costs)
• Women are often considered easier to lay off–in a patriarchy, they’re a ‘reserve army’ of labor.
• Women’s productivity means increase profits, which often leave the country and accrue mostly to foreigners.

Some questions

So . . . Is factory work transforming? Does it empower women? The citizens of a country? Transforming for whom? For what institutions?

Does the labor market tend to ‘atomize’ workers? (they’re all individuals, working for individual wages, and can be replaced because of a surplus of unemployed–this is how the capitalist system works).

Do women confront a ‘glass ceiling?’ Are they able as men might be to move up into the ranks of management?

Is there a relationship between factory work and the informal economic sector?

Women benefit, like any worker, from employment. But there is considerable instability of employment. This is both the nature of global labor, capital sourcing, as well as employers’ power to fire workers for becoming pregnant, being late (more likely with women who might have children, child care needs, transportation problems, etc.). But then, how many workplaces even in the US are set up in a way that recognizes who has the babies, who’s more likely to stay home with sick kids, etc.?