Outsourcing – Don't Get Bangalored?
As the world has gotten “smaller” in terms of trade, outsourcing has become a hot topic in much political and economic debate in the United States.
An Associated Press-Ipsos poll in May 2004, found that 69 per cent of Americans thought that outsourcing hurts the US economy while only 17 per cent thought it helped . President Bush’s chief economic advisor Greg Mankiw has stated “outsourcing…is something that we should realize is probably a plus for the economy in the long run” . While John Kerry has emphasized, that he is going to stop the outsourcing of American job . With the presidential election coming up, and the candidates giving mixed signals about the effects of outsourcing, it could turn out to be a decisive issue. A recent poll said 22 per cent considered outsoursing somewhat important while 68 per cent said it was very important . Not to astray, for many years Americans have witnessed the outsourcing of labour-intensive production, such as manufacturing. And the US economy has actully gained from it, in terms of higher productivity. But on the other hand, for many Americans outsourcing posses a real threat. However, in recent years services, which earlier was characterized as non-tradable, are also outsourced. As developed countries, like India and China, are able to offer cheap skilled labour surely there is a great enticement for US firms to move such services abroad, thus shifting jobs abroad. Where will that leave the US and its skilled workers – are they in a sense getting Bangalored?
In this paper, I will present evidence that argues both for and against outsourcing.
I will first point out main points of Jagdish Bhagwati’s paper “The Muddles over Outsourcing” and sup...
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...ing” By Jagdish Bhagwati, Arvind Panagariya and T.N. Srinivasan
To be published in The Journal of Economic Perspectives, Fall 2004
“Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth” By Catherine L. Mann From Institute For International Economics
““Offshoring” Service Jobs: Bane or Boon – and What to Do?” By Lael Brainard and Robert E. Litan From The Brookings Institution – Policy Brief #132 April 2004
“Nagging doubts about the benefits of globalization, and a look at the evidence”
Economic focus – Trade disputes Class handout
“Immiserizing Trade: A Theoretical Note” By P.A. Black From The South African Journal of Economics, June 2002