Due to the considerable growth of some Asian countries with regard to industrial production and exports, this article focuses on textile, electronic and automobile industries that played major parts in that growth.

At present, a major share of the world’s industrial products has been focused in a limited number of countries, so that about four-fifths of such products are produced in three regions of North America, Western Europe and Japan with the United States, Japan and Germany accounting for 60% of global industrial production.

The figures show that the lion’s share of the world’s industrial products belongs to developed, industrial nations. However, the remarkable change in the situation of the industrial markets during the past 40 years—which is often referred to as a major global development—is the changing share of developing countries from industrial products. The share of developing countries from industrial products during 1953-1995 has increased by fourfold to reach about 20%.

Also, among developing countries, the share of Asian countries has been much more than other countries. During this period, the dominant role of Taiwan, South Korea, Singapore and Hong Kong in the process of the industrial development has been quite evident. Although, some other Asian countries have attained high growth rates, but distributing the share of industrial production among developing nations has been seriously uneven.

Due to considerable growth of some Asian countries with regard to industrial production and exports, this article will focus on textile, electronic and automobile industries that played major parts in the growth of these countries. The textile and garment industry has acted as a connecting bridge for most Asian countries facilitating their entrance into the industrial world. Also, production of electronic parts and semi-conductors has played a great role in the industrial growth of East Asia as a high-tech industry.

Although Asian countries were considered as newcomers in the field of electronic industries, they became industrial pioneers in this regard during a short period of time. In fact, during the past few decades, the geographical domain of some export products of the industrial countries has shifted to developing states. At first, developing countries focused on producing labor-intensive products. However, during a short time they succeeded to produce and export high-tech factory products by changing their export tendencies. One of the good examples in this regard, was the great achievements of East Asian countries with regard to electronic industries. Among other developing countries, Mexico was relatively successful in producing electronic parts. It should be noted that apart from electronic products, the developing nations were not very successful in other high-tech industrial fields. Of course, some South American countries had remarkable achievements with regard to producing medicines and getting a satisfactory share of the global market.

Changes in global trade patterns, which have started from several decades ago, have led developed countries to give their place to developing nations.

The successful developing countries were initially mere assemblers with regard to industrial production. But they succeeded to transfer technology and come up with innovations through providing suitable infrastructures, promoting educational capabilities and increasing manpower skills. Afterwards, they availed of the benefits of exporting these products to other countries, especially countries with high revenues. The said countries, managed to design products themselves and make innovations through spending revenues earned through industrial exports on research and development to attain higher technologies. These countries are currently serious rivals for pioneer industrial states such as the United States, Japan and Germany and in some cases have even overtaken them.

In view of active accessory industries relating to the automobile industry and the capacity to create a big employment domain in this sector, many governments have pursued to establish, at least, one automobile manufacturing company or further develop existing industries. At present, about 4 million people are directly working in automobile industries and more than 10 million are engaged in industries producing materials and parts needed by the auto industry. Taking into account people busy buying and selling cars and providing related services, total employees of the auto sector amounts to 20 million in the world.

A major part of the global automobile industry is monopolized by few transnational automakers. These giant companies try to harmonize their activities. About 75% of products of the global automobile industry are manufactured by the 10 top automakers and about 90% of global production is attributable to 15 big producers. Meanwhile, the global model of automobile production cannot be delineated on the strength of awareness about the establishment of transnational companies. Because due to high ratio of weight to price, producers prefer to station automobile manufacturing companies near demand markets.

In fact, big automakers invest in those parts of the world where demand for automobile is high and there are suitable investment grounds. This has prompted many governments to pave the way for foreign direct investment (FDI) in this field.

The global automobile manufacture pattern shows that auto production is currently focused in Western Europe, North America and Japan, so that about 80% of total world production pertains to these regions. Among those regions, the highest growth during the past four decades has been achieved by Japan. This country surpassed the United States in producing personal cars in 1980, so that, in 1982 out of every four automobiles made in the world, one automobile was a product of Japan, while the country’s share of total global production only was 1.3% in 1960. Of course, after 1980s, the share of Japanese automobile industry from total global figure dwindled in such a way that its share stood at about 20.6% in 1995. During the 1960s, the United States accounted for more than half of total automobile production in the world, but its share reduced to 17.1% in 1995.

Among Western European countries, France and Germany, respectively, accounted for 12% and 8% of global production, standing on the top of the major European manufacturers, followed by Spain and Britain.

Outside the three main foci of auto production, there are less important regions too. One of them is Latin America whose major manufacturers include Brazil, Mexico and Argentina. Another center for automakers has been East Asia with the major producer being South Korea. The country increased the number of its products from about 20,000 vehicles in early 1980s to 2 million in 1995. South Korea is followed by Malaysia, Taiwan and China.

During the past 50 years, the general policy governing global auto industry, has stressed moving toward centralization through global integration. In 1920, there were more than 80 automakers in the United States, about 150 factories in France, 40 factories in England and about 30 factories in Italy. At present, after the lapse of about 80 years and after numerous integrations and frequent merging of companies, the automobile market is controlled by few big corporations.

At national levels, one or two big companies enjoy the main share of production in every country. For example, Fiat in Italy; Peugeot, Citroen and Renault in France as well as Benz and BMW in Germany dominate automobile production. This degree of centralization has also occurred at transnational levels. For example, two pioneering companies of General Motors and Ford account for a quarter of total global production and Toyota Company of Japan accounts for 10% of global production and is the world’s third biggest automaker. Japan, U.S., Germany and France have five, three, three and two major automakers of the world.

About 94% of total global automobile dealing is carried out in three leading regions including the United States, Western Europe and Japan. Meanwhile, Western Europe accounts for 52% of total global trade and the interesting point is that three-fourths of auto transactions in Europe are carried out in an intra-regional manner.

Among 15 major automobile exporters in the world, Japan and Germany are on top by accounting for, at least, one third of total global exports. From the viewpoint of distribution and geographic expanse, export markets of Japan are a good example. The country accounts for one-fourth of auto sales in the United States. In Europe, Belgium and the Netherlands are deeply influenced by Japanese exports. Japanese products have captured about 10-15% of the market in England and Germany. A comparison would show that Germany exports three-fourths of its products to Europe alone. The United States is the third biggest automobile exporter in the world, which exports two-thirds of its products to Canada and Latin America.

On the whole, big, transnational corporations from developed countries still control a major share of automobile production in the world. In fact, due to utilization of advanced technology in production of new products, monopoly on production of these products is still held by the advanced countries. The successful corporations in other countries usually produce vehicles under the supervision of big corporations and under their trademarks because those trademarks mean a lot to consumers and indicate the quality of the product. Meanwhile, in view of the advantage of economic returns to scale, increase in production and presence at global markets will lead to relative advantages for production corporations. This has been a reason behind merging automakers during the past years.

Also, about 1.5 million in India, about 800,000 in the United States and about 600,000 in Japan are engaged in the textile industry.

The textile and garment industries form a major part of global trade and share of these industries from total transactions of the world markets has increased during the past years, so that, total world imports of the garment industry has increased from $41 billion in 1985 to $174 billion in 2000 and its share in global trade has ramped up from 2.4% to 3.1%. Textile industries account for a large share of low-tech industrial products not related to primary resources. A large portion of textile and garment industries does not need complicated technology as is the case with automobile and electronic parts industries and face few obstacles. An interesting point about textile industry is changing composition and centralization pattern of textile products during the past four decades. During this period, developing nations and some European countries in transit have attained considerable growth in this field. While during the same period, textile industries have grown very little in developed nations and these countries have even experienced negative growth. Although about half of the world's textile exports are controlled by developed countries, a large number of these countries have registered negative trade balances in the industry. Among developed countries, only Italy has surplus trade balance and such countries as the United States and Japan are experiencing a negative trade balance with regard to this industry.

In European Union, Germany and Italy are considered major exporters while Taiwan and South Korea enjoy a trade surplus in excess of Germany and Italy. Changes in global trade patterns, which have started from several decades ago, have led developed countries to give their place to developing nations. Germany, Japan, Italy and the United States accounted for 11.4%, 9.3%, 7.6% and 6.8% of global trade in 1980, respectively. Meanwhile, such countries as China, Hong Kong, South Korea and Taiwan have come to the top of the exporters list after two decades, while share of advanced countries from total global textile exports has considerably diminished. The only exception is Italy, whose share of total global exports has increased.

On the whole, textile products can be divided into several groups on the basis of technology used for their production. The preliminary stage of the industry includes production of cloths and simple garments from natural fibers. The next step is carried out in corporations where garments with simple designs are being produced for exports. African, Latin American and some less developed Asian countries are active in this field. The model used by these countries is mainly based on very low prices. Further steps in textile industry include increasing quality of products as well as developing production of synthetic fibers and production units producing more advanced textile products. Asian member countries of ASEAN (Association of Southeast Asian Nations), East Europe, China, South Korea, Taiwan and Hong Kong are active in this field. Of course, the technology used for producing textile in South Korea, Taiwan and Hong Kong is more advanced than other countries in this group and these countries have achieved remarkable trade surplus in textile sector.

Another group of textile products are related to advanced countries, which mainly produce high-quality products. Also, production of textile and garments in these countries is carried out in a capital-intensive manner and the rate of employment and the number of production units in these countries is decreasing. Countries with developed textile sectors are subject to intense international competition for keeping their share of international trade and some of them are facing negative trade balance in the sector.

About 50% of fabric and textile products made by textile corporations are used for producing garments. Since production of garments requires less technical complexities in comparison to other textile products, small companies are very active in the field of garments. At present, design and cutting stages have been separated from sewing with design and cutting stages being carried out in more advanced countries while the sewing stage has been distributed around the globe in the form of small contracts.

Also, concentration of capital for textile production is much less than production of textile products such as fibers and fabrics. Such industries focus on workforce and the average size of the company is much smaller than the textile industry. Therefore, the most important advantage for production of garments is the availability of an inexpensive workforce. For this reason, production of such products is focused in less developed and developing countries with lower per capita revenues where workforce salaries are also lower. Under this situation, even such countries as Hong Kong, South Korea and Taiwan will not be capable of competing with new rivals including Mexico, Honduras, China, Turkey and other less developed states. A study of exports to European countries shows that during 1985-2000, not only share of Italy and Germany of the market has reduced, but also countries as Hong Kong and South Korea have remarkably lost their export share to Europe against such winners as China, Turkey, Bangladesh and Indonesia. These countries managed to increase their share of exports to Europe remarkably during this period. Of course, Eastern European countries, including Romania and Poland have also increased their exports.

Such countries as Hong Kong, Taiwan and South Korea have lost their export markets in North America to a large extent. The shares of Mexico, Honduras and China in the export markets of North America have greatly increased during 1985-2000.

The growth phases of countries with regard to textile products have been such that more advanced countries carried out capital-intensive phases in their own countries and transferred labor-intensive phases to countries with inexpensive workforce, which included South Korea, Hong Kong and Taiwan during the 1980s. These countries gradually attained more complicated stages of textile production while a third generation of textile and garment producing countries such as China, Mexico and India has emerged where workforce is less expensive than South Korea or Taiwan. At present, these countries carry out simple processes of textile and garment production, which need more labor. Due to lowering of transportation costs, a large part of raw materials are supplied by the first and second generation countries and are converted to final products in the third generation states to be re-exported to the first and second generation states. This commercial exchange is carried out in various forms. In fact, geographical location of these products is gradually shifting from developed countries to developing states. The most important reason for this change is the labor-intensive nature of production process of such products. Also, advanced technology needed for producing part of such products is owned by the developed countries.

Electronic products can be divided into two major groups of semiconductors and other active electronic parts as well as electronic consumer goods.

Production of semiconductors increased considerably after their introduction to commercial markets during the 1950s, so that production of these goods during the 1950s increased by twofold per year. The United States was the first commercial producer in this field, which started exporting them since the 1950s. After three decades, Japan surpassed the United States in producing these products and became the world’s pioneer in semiconductors, so that it accounted for about 37% of total global production in 1996, followed by the United States and South Korea with 25% and 11% of shares, respectively. During the same year, European countries accounted for 9% of total world production topped by Germany, France and England with 29%, 24% and 19% shares of total Europe’s production, respectively. On the whole, this industry is one of the most dynamic industries in the world. Export of electronic parts increased from $26 billion in 1985 to $235 billion in 2000. There has been a constant intense competition in global semiconductor trade between the United States and Japan, while Europe has endeavored to keep its share of the global markets. Meanwhile, South Korean and other East and Southeast Asian countries must be mentioned as major producers of such products. Until the early 1980s, the United States and Japan were biggest producers of semiconductors in the world. However, they transferred a major part of their products to East Asian states after making huge investments there, so that in the early 1990s about 45% of Japan’s foreign direct investment and about 25% of the United States’ foreign direct investment were made in electronic industries of East Asia. These investments have led to many changes in production and trade of semiconductors. Japan’s trade surplus with regard to electronic parts was about $18 billion in 1994 and trade surplus of South Korea stood at $8 billion. At the same time, the trade balance deficit of the United States in this field was about $8 billion and that of Europe was $10 billion.

The main demand for semiconductors comes from information technology, computer, communications and consumer electronic parts industries. In the United States, at least at the outset of semiconductor production, the demand mainly came from defense and space industries, which explains huge initial growth of semiconductor industry in the United States. In Europe and Japan, demands related to the defense sector were much less important than application of semiconductors in electronic consumer industries. However, during the short life of semiconductor industry, the governments have always been major consumers of such products.

In 1995, global sales of semiconductors topped $150 billion, which was three times the corresponding figure for 1985. Estimates show that the volume of global market for semiconductors triples every five years. On the whole, the biggest end user of semiconductors is computer industries including personal computer companies. About 60% of revenues from semiconductors are related to selling parts to computer companies. The two industries, that is, personal computer and semiconductor have been dependent on each other.

On the one hand, the demand created by personal computer companies increased the demand for semiconductors and, on the other hand, pioneer producers in the field of semiconductors, created demand for more powerful computers by introducing new generations of more powerful chips. A major reason behind increased demand for semiconductors has been remarkable decline in their sales price. Part of this decline is attributable to the development of the industry’s technology and another part was due to intense price competition among various electronic products.

With regard to electronic consumer parts, the main point is that these industries have developed much more than semiconductor industries across the world and it is in these industries that the special role of South and East Asian countries becomes clearer. With regard to electronic consumer industries, there is less geographical concentration in comparison to semiconductor industries. While four-fifths of semiconductor parts are produced in the United States, Japan, South Korea and Western Europe, this figure for electronic consumer parts stands at about 60%. South and East Asian countries, including Japan, are the most important world producers with regard to these industries accounting for two-thirds of global production of electronic consumer parts.

At the beginning of the 1970s, the United States and Japan launched investment activities in labor-intensive sectors characterized by assembling electronic products in East Asia. In fact, their main motivation was taking advantage of inexpensive workforce in the sector. Later, producers of electronic equipment and home appliances transferred production of a major part of their products to East Asian countries. Japanese transnational companies with export tendencies, also gradually shifted their production bases to this region since 1980. Due to import obstacles in Japan, these companies chose for investments in this region. In view of inexpensive workforce, suitable manpower training and necessary infrastructures for investment, this region is one of the most suitable areas for investments by transnational companies.

On the whole, these developments have led to emergence of several producers of electronic products as well as a number of production foci such as Singapore, Malaysia, Taiwan and Philippines. The interesting point is the emergence of South Korea as a major global player by the end of the 1980s. South Korea has evolved from a minor producer to the third producer of electronic products in the world.

The shift in the global model of production of electronic consumer parts can be studied through case study of production of television sets. The global model for producing television sets characteristically changed between the late 1970s and 1980s. During this period, total global production had increased by about 68%, while corresponding figures for Europe and the United States stood at 9% and 21%, respectively. The highest production growth rate pertained to Asia that registered a 168% growth. However, growth rate differs a lot in various Asian countries. Japan, as the world pioneer in television industry in 1978, has increased it production only by 13%. Meanwhile, production in Malaysia, South Korea and Singapore during 1980s increased about 725%, 204% and 193%, respectively.

The demand pattern for electronic consumer goods is different from that of semiconductors. Firstly, these products are end products in demand and, secondly, they have high revenue potentials, while revenue potential for semiconductors is usually lower and industrial as well as governmental demand is more important for semiconductor industry.

The demand for such products as television sets resembles the demand for automobiles in many respects. The demand for such goods grew rapidly during 1960s and 1970s and led to intense concentration of demand in high-revenue countries during this period. During concluding years of 1970s, in addition to the effect of economic crisis on purchasing power of consumers, the markets of advanced countries gradually reached a saturation state. For this reason, the strategy adopted by many corporations producing electronic consumer parts such as the television was based on a shift in demand and finding new markets. Therefore, markets in developing countries became a good substitute for saturated previous markets with the assumption that revenues of these countries are on the rise.

Another important issue with respect to the electronic industry is the methods used for keeping the market going. In a competitive industry with an ever-changing technology, such as the electronic industry, corporations have to adopt different policies to assure their survival in the market and boost their activities. In line with rapid market changes, pressures resulting from technological and political issues would change global scheme of production and trade of the electronic products. Various factors such as the size of the corporation and its geographical location affect policies adopted by that corporation. The strategies of big producers in this field would be much different from strategies adopted by small firms. A usual method for surviving under competitive conditions is merging production corporations and creating bigger ones. Another usual policy among electronic industry corporations is specializing in separate markets.