Open Economies: Open Minds
Outsourcing: Long-term gains for all
It is true that outsourcing to India and greater trade with China do cause an immediate loss of jobs, but these are more than made up for by the creation of new jobs elsewhere.
The textile sector once employed a large number of American workers, and the US car manufacturers once dominated the world.
If the jobs that were lost in these sectors were protected through trade restrictions, there could be more textile and automobile workers in the US today, but there would be fewer jobs on the whole.
…
The freer trade with China and the unprecedented collaboration with India’s information technology sector, in the form of both admitting computer scientists to Silicon Valley and outsourcing work to India, gave the US the competitive edge.
It is this openness that the US has used time and again in its history to keep the lead.
Trade and exchange help both sides. A recent McKinsey study estimates that for every dollar of value created by US outsourcing, the US manages to capture 78%, and 22% accrues to the receiving country.
Globalisation cuts both ways. It’s better to take advantage of it than to succumb to the very short term and entirely political benefits of protectionism.
Wednesday 31 Mar 2004 | Paul | The Pit
