Flexible Automation and Location of Production in Developing Countries

This paper analyses and assesses the potential impact of microelectronics-based forms of flexible automation (FA) on the location of industrial production in developing countries. It suggests that for developing countries as a whole the diffusion of FA does not favor the establishment of a local engineering industry. The converging production and cost conditions worldwide, the higher optimal scale plants and the growing infrastructure requirements arising out of FA demand cost reducing, quality enhancing, learning, investment, research and development, marketing and increasing market share efforts beyond most local firms' possibilities. Yet, possibilities for location in specific countries may arise out the skill and possibly capital saving characteristics of the new technologies, the high labor costs of simple assembly processes in developed countries, the available technical and financial capability of very large domestic firms, the size of the respective market and the capacity of each country to introduce creative and innovative policies.