Outsourcing - An International View of Outsourcing Every...

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An International View of Outsourcing Every decade or so, developed countries develop a crisis of confidence: if jobs keep migrating overseas will there be any jobs left at home? For example, in the United States in the 1980s, it was the fear of Japan. In the 1990s, it was “the giant sucking sound” from Mexico. Today, India and China are regarded as threats, and outsourcing of jobs is blamed for jobless growth in the developed world. Of course, the rhetoric usually heats up when elections are near. In a sample of US newspapers and magazines, there are local peaks in the number of articles on outsourcing in 1996, 2000, and 2004, all election years. Similarly, slow domestic job growth raises interest in outsourcing—in the first two weeks of March, when jobless recovery was on everyone’s mind, there were three times as many articles on outsourcing and unemployment as in the last two weeks of April after strong reports of US job growth. So will the current anxiety over outsourcing, echoes of which we hear from Australia to the United States, die down once we move beyond elections and once the recovery becomes firmly established? This episode is different from past periods of anxiety over imports, which is why one cannot be sanguine that it will pass as easily. Outsourcing of services is different in one important way from imports of physical goods—it is harder to control, therefore less predictable and a greater source of anxiety. The service sector was largely impervious to international competition in the past. Accountants did not fear someone overseas would take their high-
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This note was uploaded on 11/23/2010 for the course ECONOMICS Econ 13 taught by Professor Georgesarraf during the Winter '10 term at UC Irvine.

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Outsourcing - An International View of Outsourcing Every...

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