Eleventh Global Studies Conference

Abstract

As production becomes more and more capital-intensive, the investment in new technologies may become a serious threat for México’s industrialization. The technological revolution will lead to a supply-side benefit derived from productivity, pervasiveness, and velocity. At the same time, the net displacement of workers by automation will yield greater inequality between low skill- low wages and high skill- high pay employees. Inequality in returns will be very important between capital, knowledge, and labour. Low- labour cost advantages will shrink and re-relocation of manufacturing activities towards developed countries could follow. For the new economy, innovation will be the strategic factor of production. In fact, the robots and other technologies whose prices are declining can carry out many production tasks cheaper than human labour with economies of scope and scale, greater productivity, precision, security, and speed. However, nowadays robotization and other technologies are less present in labour-intensive industries (as garment, footwear, leather, and assembly activities) than in capital-intensive ones. This is because in a mid –term horizon robots in labour-intensive activities are not yet able to solve technical problems concerning the transformation of raw and intermediate materials. Also, at the present time robots are not yet sufficient or cost-effective to allow very short cycles of production due to quick changes in fashion. In these labour-intensive industries and activities the flexibility of labour is higher than the one of the robots. Unless a breakthrough in technologies generates very flexible capital goods for assembly processes, the conditions for offshoring will subsist.