The politicians in high-income countries are approving rules to stop offshoring because they think that no more job opportunities will come instead. The issue of economic policy towards offshoring will be discussed in chapter 9. Offshore outsourcing (which embodies specialization and technological process) goes on continually. People who are able to perform jobs requiring higher qualification benefit
5 Friedman, Thomas L. (2005), The World is Flat: a Brief History of the Twenty-first Century. New York: Farrar, Strauss and Giroux.
from offshoring. The firms that are able to compete under these conditions and the states whose administrative does do not blockade offshoring benefit as well.
The era of offshoring requires a lot of flexibility. It demands continuous learning and one should be always ready to change the field of qualification. The schools should not teach the scholars the curriculum of facts but the teachers should mediate the skill of learning and the knowledge applicable in the whole range of potential jobs (PC skills, communication a presentation skils etc.).
People who can not participate in the economy which uses computers and other brand new technical stuff (such as people of low qualification and elderly), they are the losers. Mothers who stay at home with their children for a long time without keeping in touch with their profession are threated as well. I would recommend to people who are not willing or able to react on this pressure to find a job in personal services which can not be offshored or in the craft. However the jobs currently seen as non-offshorable may in few years move offshore as well.
The economic policy (social state benefits) should motivate people to do their best to participate in the labour market. Even the economies with rather flexible labour markets implement new schemes of unemployment benefits. USA, South Korea, Japan or France pay extra benefits when a job seeker finds a job within certain period of time. US government also pays elderly people when they accept lower paid job than they had before. The amount is equal to difference between previous and new salary.
These policies support fast re-employment. (OECD 2005c: 83) Another type of policies facilitating adjustment concerns consulting and training services. (OECD 2005c: 67) Mobility of labour force should be supported. One of the potential barriers is high tax on property transactions. (OECD 2005c: 87)
The states that aim at stopping offshoring will not benefit from the world market to the maximum potential extent. OECD analysts definitely reject trade protectionism.
According to them international competition itself is a powerful instrument for restructuring. (OECD 2005c: 90) The firms which do not offshore while the others in the branch do will go bankrupt.
In my point of view discrimination of women and people of ethnic minorities hampers the economic growth because this way the economy looses their talent. More
should be done particularly in the case of women to make it easier for them to joint childcare and work if they like. The men can start at themselves and help the women in households to give the women more time to gain new knowledge and participate in the labour market. The state may provide extra childcare benefits in order to help parents to pay a baby sitter if they need one. The minorities often face the undervaluation when they apply for a job. The state administrative of high-income countries should work more properly on reducing discrimination of people who do not come from the Euroatlantic region6 who suffer from the worst discrimination at the labour market
Nature suffers a lot thank to offshoring because it requires a lot of transportation and thus it causes pollution. The countries should adopt such taxation systems which gives preferential treatment to environment-friendly transportation technologies. The additional policy option is to aim at fulfilling the assumptions of the Coase theorem to decrease the transaction costs of reaching the agreements in the case of natural demages.
6 Western Europe and Noth America.
4 Offshoring of R& & & &D
Offshoring in research and development presents the most recent trend. The paragraphs in this section focus on changes which enabled offshoring of this kind and specific types of cooperation in the sector of R&D.
It was common that a firm ran its R&D department close to its headquarters.
Recently firms started to move the R&D departements offshore. Fims from high-income countries locate R&D centers in both high- and low-high-income economies. What factors do firms take into account when they decide to move or not to move R&D?
On one hand there are internal factors. Centralisation secures proximity and coordination with the headquarters. On the other hand it may worse cooperation with the parts of production located elsewhere and loose advantages from setting-up the research center in a technological cluster. Decreasing communication costs and new management proceedings reduce transaction costs. Decentralisation is also supported by higher standardization and codification of R&D work. Availability of skilled and cheaper workforce belong to external factors. (UNCTAD 2005: 158) In general, „costs rise with geographical, economic, cultural and linguistic distance“. (UNCTAD 2005:
157) The firms would not locate R&D center in weak intellectual property rights regimes (where firms might not save their R&D achievements).
Once a firm decides to offshore R&D center, it may also outsource it. High minimum starting investment needed to run a firm´s R&D department increaseses willingness to outsource R&D.
4.1 Types of Offshore R& & & &D Departments
The most common type of R&D offshoring is adaptive R&D which secures adjustment of products to local specifications. (UNCTAD 205: 158) R&D centers of this type take a place when a market abroad is very different and large enough for export. Technology sourcing and monitoring is the second most important type of R&D
investment. It aims at monitoring of the latest technological innovations. That is the reason why many firms located their branches in Silicon Valley in the USA.
R&D centers may be divided into three levels according to the extent of independence within the firm. Satellite laboratories adapt existing products on local conditions. Contract R&D centers deal with the implementation of global projects.
Equal partnership allows R&D centers to full knowledge-exchange within firms and have regional or global product mandate. (UNCTAD 2005: 166) It is assumed that the satellite-type laboratories prevail in low-income economies (for instance in China) while the equal partnership laboratories are settled mostly in low-incom economies.
(UNCTAD 2005: 167)
India is an exceptional case among low-income countries. Satellite laboratories have been settled there since the seventies. Nature of the R&D investment have been changing since the eighties and global firms such as Microsoft, Pfizer, Motorola, Daimler-Benz came in the nineties and developed advanced laboratories. (UNCTAD 2005: 167)