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Environmental Regulations as Technological and Market Constraints to Automobile Production. The Case of the Heavy Vehicle Industry in the Republic of Belarus
Submitted by Vallejo Bertha, Tiburg University, CentER Development Research Institute (IVO) - Tilburg University on 27 févr. 2013 - 19:35
Type de publication:Conference Paper
Source:Gerpisa colloquium, Paris (2013)
The automotive industry worldwide is constantly in a state of technological and organizational change, and this has an impact on the manufacturing activities located in transition and developing economies. The industry worldwide has been subject to increasingly stringent production, quality, organizational and environmental standards. Since the early 1990s, with the globalization, organizational and technological restructuring in the auto industry have been particularly dynamic (Calabrese, 2000; Carrillo, 2004; Lamming, 1993). In the case of the Triad, namely USA, Europe and Japan, environmental standards constitute more and more of an entry barrier to the global market. Regulatory standards in neighboring commercial countries and their adoption in important trade partners could have important commercial implications for developing countries if its automotive production is not accordingly upgraded.
In the search for competing for markets and the challenge to compile with the existing (and forthcoming) environmental and regulatory standards, we can observe an important process of consolidation of the industry. Under this process, not only the assemblers but the whole industry has become more concentrated and less vertically integrated by outsourcing not only parts and components but also processes (The Economist, 2002, 2005). The process is accompanied by a movement towards the regionalization of the industry, in which more and more assemblers and OEM firms are adjusting their profit and location strategies in peripheral countries.
Several studies show that assemblers delegate the development and delivery of automotive parts and components to its suppliers has a strong influence on the internationalization of the industry (e.g. the search for cheaper and more efficient providers of parts and components abroad). The key role in managerial and strategic decisions is performed by the headquarters of the assemblers and main OEMs. National actors are no longer in charge of the decision-making for all processes, as foreign companies begin to play relevant roles in the direction of industries. Under this scheme, the chosen developing or emerging countries act as export platforms to supply mature markets due to their proximity and/or existing trade agreements.
However, this scheme is not followed all around the globe. There are still countries which a national automotive industry following different paths of development. A relevant question hidden and not openly asked is: Are these countries able to catch up with the new competences required by tomorrow’s automobile industry? The literature tells us that the answer depends largely on their existing knowledge and absorption capacity of the industry (Cohen & Levinthal, 1990; Katz, 1973). However, technology ownership also plays an important role in market access.
The study aims to explore it using the case study of the Republic of Belarus heavy vehicle production. The study analyzes trade implications of national automotive production in an economy in which trade agreements are mostly signed with countries with a similar background. No foreign participation in the industry and predominant State ownership and decision making in the development of the industry make this case rather interesting (UNIDO, 2011). The study provides an interesting perspective by adding the heavy commercial vehicles perspective to the general analysis of the passenger vehicles segment of the industry.
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