Health, Women's Work, and Industrialization - Center for Gender in ...

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and because manufacturers need to hol d 1 abor costs down, Ameri can
semi conductor fi rms, bei ng industry 1 eaders, began to set up an
international assembly line in the 1960s, with the Europeans and Japanese
following shortly thereafter. The semiconductor industry's search for
off-shore locations coincided with the adoption of a rapid industrialization
strategy by many Asian countries. It was a time when a development strategy
of import-substitution was seen as a failure. When Taiwan's Kaohsiung Free
Trade Zone was successfully set up in 1965, other governments also bui lt
free trade zones and developed industrialization policies that were
export-oriented. To attract foreign investments, Asian governments offered
a variety of incentives, such as tax holidays, import duty waivers,
unl imited repatri ati on of profits, and control s of 1 abor-organi zing
activiti es. These governments, interested ina 11 types of di rect forei gn
investments, found opportunities in all branches of electronics, garments,
textiles, footwear, toys, sporting goods, and other labor-intensive
enterprises.
Among the semiconductor manufacturers, Fairchild was the first to begin
off-shore sourcing when it set up an assembly plant in Hong Kong in 1962.
General Instrument was the first in Taiwan in 1964, and Fairchild the first
in Korea in 1966. Nati onal Semi conductor estab 1 i shed a flood of fi rms in
Singapore in 1968 and Malaysia in 1973, and then set up the first plant in
Thailand in 1974. Assembly plants were set up in the Philippines and
Indonesia in 1974. Although Asia has been the preferred region for
off-shore sourcing, a few plants are also found in the Caribbean area and
Mexico. In these less developed countries (LOCs), the semiconductor firms
were involved only in the most labor-intensive process (assembly), with
other steps in the process bei ng done at the home country; only in recent
years have they started to shift testing operations to a few Asian
countri es. Today, wi thout excepti on, every establ i shed U. S., if not other,
semiconductor firm is engaged in some off-shore assembly.
Economic imperatives were important in the move to develop a global
assembly line. Studies of industry leaders (Saxenian 1981; Lim 1978a) cite
as the most important reason for locating overseas the plentiful supply of
low wage labor in LOCs. When the electronics industry was rapidly
developing in Asia in the mid-1970s, low wages (see Table 1), especially
relative to the level in the U.S., presented a great attraction to the TNCs.
Although wages in all these countries are low, there are substantial
differences among them, in part refl ecti ng the chronology of el ectronics
industry locations in Asia. Between 1976 and 1980, wages in electronics had
risen considerably in these countries. Still, the wages were substantially
less than those in the U.S. or Japan, as seen in Table 2.
Other issues identified by the corporations as important locational
factors were: (1) the cost, reliability, and accessibility of transportation
and communications, (2) tax holidays and other investment incentives, (3)
proximity to local markets, (4) local infrastructure, and (5) political
stability (including ability to control labor unrest).