Flexible automation and location of production in developing countries

This article analyses and assesses the potential impact of microelectronics-based forms of flexible automation (FA) and related organisational techniques on the location of industrial production in developing countries. It suggests that for developing countries as a whole the diffusion of FA does not favour the establishment of a local engineering industry. The converging production and cost conditions world-wide, 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 which are beyond the possibilities of most local firms. Yet, opportunities for location in specific developing countries may arise out of the timing of adoption, the skill and possible capital-saving characteristics of the new technologies, the high labour costs of simple assembly processes in developed countries, the available technical and financial capability of some very large domestic firms, the size of the respective market and the capacity of each country to introduce imaginative and innovative policies. © 1999 European Association of Development Research and Training Institutes.