1 Internationalization and the International
Division of Labour
Anne-Wil Harzing1 Introduction 9
2 Statistics on internationalization trends 10
3 Determinants of international trade 11
4 The reason for multinational companies 15
5 The comparative and competitive advantage of nations 19
6 Trends in the international division of labour 24
7 The competitive advantage of multinational companies 28
8 Summary and conclusions 30
9 Discussion questions 30
10 Further reading 31
References 31
1 INTRODUCTION
In this chapter, which will set the background for the remainder of this book,
we will discuss a number of important issues with regard to internationali-
zation and the international division of labour. We will begin in Section 2 by
offering some statistical data which demonstrate the importance not only of
international trade but also of foreign direct investment (FDI). Sections 3 and
4 will next discuss a number of theories which explain these phenomena. In
Section 5, we will explore product specialization across countries. We will do
this using Porter's analysis, which explains the competitive advantage of