(no subject)
So, the subject is a little boring, but here it is.
The Glory of Globalization:
How Universal Labor Will Unite The World
The very idea of globalization has been in the works for thousands of years. From the first hoots and grunts called out over the prehistoric landscape by apes and near-men to the most recent issue of the Wall Street Journal, the world has been getting smaller as the years pass. Before 7200 B.C., it is assumed that we were all still dominated by our primitive instincts of food and survival. But something happened on that day, seven thousand years before the birth of Christ. In a segment of fertile land, nestled between the Tigris and Euphrates rivers, an idea was born. The very idea that has been cultivated, revised, and held on the tip of every worldly man’s tongue for almost ten thousand years: the connection between one man and the man standing beside him. The idea that survival is difficult for the hairless, clawless, naturally defenseless species that we claim a belongingness with. But, standing together in a community, our natural defenses emerge, and with them, we claimed our right to be the dominant species on the planet. Yes, on that day, 7200 B.C., civilization was said to have been born in a small community called Catal Hayuk, also referred to as Sumer. (“Sumer - An Introduction”) Accompanying Sumer was the birth of globalization: the concept of connecting people to cities, connecting cities as territories, and eventually connected those territories as nations.
Now, knowing where globalization comes from, one can easily see where it is going in the modern world. Business tactics have been centered on globalized labor since international trade expanded during the Renaissance. But in today’s society, globalization can mean different things. Globalization as a general term is separated into two categories. Global outsourcing is defined as an arms-length transaction with no direct interface between producer and consumer (Srivastava 39). The more prominent source of globalization is called captive outsourcing. It is defined as actually establishing a commercial presence by foreign producers in another country (Srivastava 39). This can happen for many reasons. Many times there is cheaper labor in under-developed countries. Many times the labor is of higher quality because the country it is outsourced to have higher ratings of education or higher average years of school attended. Many times entire industries are lost to globalization, as is evident in the trend of outsourcing manufacturing jobs from countries such as the United States to countries such as India or China. However, although responsible for job loss in some fields, global outsourcing is not a one way street from developed to developing countries (Srivastava 39). It is, in fact, a two-way street that involves jobs both going overseas and being imported, which opens new markets and job opportunities. Therefore, globalization is a positive trend which has been going on for years, and must be utilized in order to capture the positive aspects, which are available on different levels to all those involved.
Controversial as it may be, the main focus of the business mind has always been to turn a profit. Quality products or services, social obligations, and fair treatment of employees are also important values to keep in mind, but within the system of capitalism, the profit always takes first place. If the manufacturing cost of producing a product is less in one place than another, the obvious choice is the manufacture there to maximize profits. As Adam Smith said in The Wealth Of Nations: “The proprietor of stock is necessarily a citizen of the world, and is not necessarily attached to any particular country. He would be apt to abandon the country in which he was exposed to a vexatious inquisition, in order to be assessed to a burdensome tax, and would remove his stock to some other country where he could either carry on his business, or enjoy his fortune more at ease.” (Book V, Chapter II)
The world as we know it is changing as time passes. The “Four Little Tigers” are a prime example of that. The Four Little Tigers consist of Hong Kong, Singapore, South Korea, and Taiwan, whose miraculous economic development and industrialization in the 1960’s-1990’s took them from underdeveloped countries to fully industrialized nations in half of a century. Many things took place for this change to occur. The governments of these nations adopted a statist approach to industry. A statist approach can be defined as a concentration of economic controls and planning in the hands of a highly centralized government (Miriam-Webster). These Tigers took matters into their own hands, adopted export-oriented policies, raised educational standards, and heightened the attention to savings and investment (Deuk Hahm 385). The role of Confucian culture also comes into play, as it provides a structural hierarchy to priorities. Family comes first, followed by the needs of society, followed by the needs of the individual. Because of this, industries united in order to provide benefits to their families, which provided benefits to their society as a whole, as shown by each of their respective countries achieving Newly Industrialized Country (NIC) recognition in the 1980’s.
The point being made with the history of these Four Asian Tigers is that business will travel where opportunity resides. That is the way of the world, and as the United States improves its technology and policies, so too are the other nations of the world. When educational and industrial standards are raised, jobs will flow to that location. What has happened in this portion of the world will continue to happen through the rest. India has increased its capabilities in many areas including information technology and research and development, and because of this they have been ranked as one of the top three countries that a business will outsource to, accompanied by China and Russia (Srivastava 39).
Surviving in the world market requires one to know what jobs are going where. Srivastava states that the top three industrial outsourcers are the United States, Japan, and Germany. The jobs themselves have been divided into two groups: Business Process Outsourcing (BPO’s) and Knowledge Process Outsourcing (KPO’s). BPO’s include organizational assistance such as call center support, data entry, coding, medical and legal transcription and testing. KPO’s are more high-end activities that require consistent communication within the organization. The outsourcing of these activities has recently increased, and they include: investment analysis, market research, consulting, legal and insurance claims processing, software design, architecture, chip design, inventory management, drug discovery and other research and development activities (Srivastava 39). BPO’s and KPO’s share one quality: they are both jobs that can be done without being centralized to one location. A business in the United States can have a call center in India shut down, and open one up in Turkey a day later without missing a beat. These activities also require no face-to-face communication; therefore they can be filled wherever labor is the cheapest. That is the global market. That is the world today.
So, what have these countries done in order to earn the status they have today? Educational standards have risen, for example. The United Nations Statistics Division (UNSD) has the average educational life expectancy of the United States ranked as 16. Russia is close behind at 14, while China and India follow behind with 11 (China) and 10 (India). The fact is that the educational standards of these countries are close behind those of the United States, Japan, and Germany (all 16). Also, because of their status as NIC’s, these countries still have relatively cheap, quality labor. Therefore, it only makes sense that jobs will flow where intelligent employees can do the same job for less pay.
Export-oriented industrialization (EOI) may also attract potential outsourcers and draw attention to the countries positive capabilities. The statist approach of the Four Little Tigers is a prime example of EOI. The devaluation of currency and government support in export sectors of industry are both main characteristics of a statist country (Srivastava 39). Another opinion is that jobs are being outsourced to this region because of the long term effects of TQM (Total Quality Management) and Dr. Edward Deming’s assistance in rebuilding Japan after WWII. Dr. Deming focused on quality as a statistic, and therefore taught the industrial leaders in Japan how to raise that statistic. Because of this, the quality of products improved, as did the reputation of industry in Japan. As time progressed, the ideals spread and is now adopted in most parts of the world. Because of this, Asia has risen to become influential within the world market.
There are material gains to captive outsourcing. The McKinsey Global Institute states in 2003 that for every US dollar offshored to India, the US gains $1.12 and India gains $.33. However, to the individual, gains may take a while to manifest. Captive outsourcing will, inevitably, lead to white collar job loss (as IT services move across the globe) much the same as manufacturing outsourcing has disrupted the security of blue collar workers in the past. However, this transitional loss will bounce back as the cost of final goods and services are also lowered. Outsourcing benefits developing countries more directly, by providing them with the means to produce, exponentially raising export numbers, which has led to a rise in individual income. Because of this, there have been increases in outbound tourism in these countries, positive global feedback, and a higher sense of global unity (Srivastava 39-40).
So what is the conclusion to global outsourcing? While for individual countries it may have negative implications, the year is 2008 and the world is getting smaller by the minute. It is become more of a social norm to look a situation from the perspective of the world market than it has the look at it from a perspective of a national market. It is time to think like a global citizen. Power and influence have always shifted from country to country throughout history. For a long time, Rome ran the show. England had its share of power, followed by Russia. In today’s world, the United States has stepped up as the world superpower. But the times are changing, as with them are the industrial leaders and their influence.
The future of the world is a mysterious unknown. What is known is that as jobs are exported, different jobs are also brought in. It is less of an epidemic of job-loss and more of a period of transition for the global market. It is the belief of your humble author that this period will lead to a time of higher value placed on jobs that are domestic bound: jobs in the service industry, distribution, education, and medical organizations will retain the main focus, and improvements made on these industries will begin a chain reaction of short-term effects that will eventually lead our country to long-term progress. In a way, industrial outsourcing is doing a favor to America: stripping away the excess so a renewed focus can be place on those important industries that affect our citizens the most.
Works Cited
“Sumer: An Introduction to Sumer.” About.com: Ancient/Classical History. 30 Oct 2008.
The Glory of Globalization:
How Universal Labor Will Unite The World
The very idea of globalization has been in the works for thousands of years. From the first hoots and grunts called out over the prehistoric landscape by apes and near-men to the most recent issue of the Wall Street Journal, the world has been getting smaller as the years pass. Before 7200 B.C., it is assumed that we were all still dominated by our primitive instincts of food and survival. But something happened on that day, seven thousand years before the birth of Christ. In a segment of fertile land, nestled between the Tigris and Euphrates rivers, an idea was born. The very idea that has been cultivated, revised, and held on the tip of every worldly man’s tongue for almost ten thousand years: the connection between one man and the man standing beside him. The idea that survival is difficult for the hairless, clawless, naturally defenseless species that we claim a belongingness with. But, standing together in a community, our natural defenses emerge, and with them, we claimed our right to be the dominant species on the planet. Yes, on that day, 7200 B.C., civilization was said to have been born in a small community called Catal Hayuk, also referred to as Sumer. (“Sumer - An Introduction”) Accompanying Sumer was the birth of globalization: the concept of connecting people to cities, connecting cities as territories, and eventually connected those territories as nations.
Now, knowing where globalization comes from, one can easily see where it is going in the modern world. Business tactics have been centered on globalized labor since international trade expanded during the Renaissance. But in today’s society, globalization can mean different things. Globalization as a general term is separated into two categories. Global outsourcing is defined as an arms-length transaction with no direct interface between producer and consumer (Srivastava 39). The more prominent source of globalization is called captive outsourcing. It is defined as actually establishing a commercial presence by foreign producers in another country (Srivastava 39). This can happen for many reasons. Many times there is cheaper labor in under-developed countries. Many times the labor is of higher quality because the country it is outsourced to have higher ratings of education or higher average years of school attended. Many times entire industries are lost to globalization, as is evident in the trend of outsourcing manufacturing jobs from countries such as the United States to countries such as India or China. However, although responsible for job loss in some fields, global outsourcing is not a one way street from developed to developing countries (Srivastava 39). It is, in fact, a two-way street that involves jobs both going overseas and being imported, which opens new markets and job opportunities. Therefore, globalization is a positive trend which has been going on for years, and must be utilized in order to capture the positive aspects, which are available on different levels to all those involved.
Controversial as it may be, the main focus of the business mind has always been to turn a profit. Quality products or services, social obligations, and fair treatment of employees are also important values to keep in mind, but within the system of capitalism, the profit always takes first place. If the manufacturing cost of producing a product is less in one place than another, the obvious choice is the manufacture there to maximize profits. As Adam Smith said in The Wealth Of Nations: “The proprietor of stock is necessarily a citizen of the world, and is not necessarily attached to any particular country. He would be apt to abandon the country in which he was exposed to a vexatious inquisition, in order to be assessed to a burdensome tax, and would remove his stock to some other country where he could either carry on his business, or enjoy his fortune more at ease.” (Book V, Chapter II)
The world as we know it is changing as time passes. The “Four Little Tigers” are a prime example of that. The Four Little Tigers consist of Hong Kong, Singapore, South Korea, and Taiwan, whose miraculous economic development and industrialization in the 1960’s-1990’s took them from underdeveloped countries to fully industrialized nations in half of a century. Many things took place for this change to occur. The governments of these nations adopted a statist approach to industry. A statist approach can be defined as a concentration of economic controls and planning in the hands of a highly centralized government (Miriam-Webster). These Tigers took matters into their own hands, adopted export-oriented policies, raised educational standards, and heightened the attention to savings and investment (Deuk Hahm 385). The role of Confucian culture also comes into play, as it provides a structural hierarchy to priorities. Family comes first, followed by the needs of society, followed by the needs of the individual. Because of this, industries united in order to provide benefits to their families, which provided benefits to their society as a whole, as shown by each of their respective countries achieving Newly Industrialized Country (NIC) recognition in the 1980’s.
The point being made with the history of these Four Asian Tigers is that business will travel where opportunity resides. That is the way of the world, and as the United States improves its technology and policies, so too are the other nations of the world. When educational and industrial standards are raised, jobs will flow to that location. What has happened in this portion of the world will continue to happen through the rest. India has increased its capabilities in many areas including information technology and research and development, and because of this they have been ranked as one of the top three countries that a business will outsource to, accompanied by China and Russia (Srivastava 39).
Surviving in the world market requires one to know what jobs are going where. Srivastava states that the top three industrial outsourcers are the United States, Japan, and Germany. The jobs themselves have been divided into two groups: Business Process Outsourcing (BPO’s) and Knowledge Process Outsourcing (KPO’s). BPO’s include organizational assistance such as call center support, data entry, coding, medical and legal transcription and testing. KPO’s are more high-end activities that require consistent communication within the organization. The outsourcing of these activities has recently increased, and they include: investment analysis, market research, consulting, legal and insurance claims processing, software design, architecture, chip design, inventory management, drug discovery and other research and development activities (Srivastava 39). BPO’s and KPO’s share one quality: they are both jobs that can be done without being centralized to one location. A business in the United States can have a call center in India shut down, and open one up in Turkey a day later without missing a beat. These activities also require no face-to-face communication; therefore they can be filled wherever labor is the cheapest. That is the global market. That is the world today.
So, what have these countries done in order to earn the status they have today? Educational standards have risen, for example. The United Nations Statistics Division (UNSD) has the average educational life expectancy of the United States ranked as 16. Russia is close behind at 14, while China and India follow behind with 11 (China) and 10 (India). The fact is that the educational standards of these countries are close behind those of the United States, Japan, and Germany (all 16). Also, because of their status as NIC’s, these countries still have relatively cheap, quality labor. Therefore, it only makes sense that jobs will flow where intelligent employees can do the same job for less pay.
Export-oriented industrialization (EOI) may also attract potential outsourcers and draw attention to the countries positive capabilities. The statist approach of the Four Little Tigers is a prime example of EOI. The devaluation of currency and government support in export sectors of industry are both main characteristics of a statist country (Srivastava 39). Another opinion is that jobs are being outsourced to this region because of the long term effects of TQM (Total Quality Management) and Dr. Edward Deming’s assistance in rebuilding Japan after WWII. Dr. Deming focused on quality as a statistic, and therefore taught the industrial leaders in Japan how to raise that statistic. Because of this, the quality of products improved, as did the reputation of industry in Japan. As time progressed, the ideals spread and is now adopted in most parts of the world. Because of this, Asia has risen to become influential within the world market.
There are material gains to captive outsourcing. The McKinsey Global Institute states in 2003 that for every US dollar offshored to India, the US gains $1.12 and India gains $.33. However, to the individual, gains may take a while to manifest. Captive outsourcing will, inevitably, lead to white collar job loss (as IT services move across the globe) much the same as manufacturing outsourcing has disrupted the security of blue collar workers in the past. However, this transitional loss will bounce back as the cost of final goods and services are also lowered. Outsourcing benefits developing countries more directly, by providing them with the means to produce, exponentially raising export numbers, which has led to a rise in individual income. Because of this, there have been increases in outbound tourism in these countries, positive global feedback, and a higher sense of global unity (Srivastava 39-40).
So what is the conclusion to global outsourcing? While for individual countries it may have negative implications, the year is 2008 and the world is getting smaller by the minute. It is become more of a social norm to look a situation from the perspective of the world market than it has the look at it from a perspective of a national market. It is time to think like a global citizen. Power and influence have always shifted from country to country throughout history. For a long time, Rome ran the show. England had its share of power, followed by Russia. In today’s world, the United States has stepped up as the world superpower. But the times are changing, as with them are the industrial leaders and their influence.
The future of the world is a mysterious unknown. What is known is that as jobs are exported, different jobs are also brought in. It is less of an epidemic of job-loss and more of a period of transition for the global market. It is the belief of your humble author that this period will lead to a time of higher value placed on jobs that are domestic bound: jobs in the service industry, distribution, education, and medical organizations will retain the main focus, and improvements made on these industries will begin a chain reaction of short-term effects that will eventually lead our country to long-term progress. In a way, industrial outsourcing is doing a favor to America: stripping away the excess so a renewed focus can be place on those important industries that affect our citizens the most.
Works Cited
“Sumer: An Introduction to Sumer.” About.com: Ancient/Classical History. 30 Oct 2008.