These days, US fears of offshore outsourcing are echoed by European worries about an influx of poor Eastern Europeans when the accession countries join on 1st May. White House economists are pilloried for publicly stating The Bleedin Obvious, and the Daily Mail is convinced Britain will be overrun by Roma. What links these two issues? Fear of competition. Or, as our friends in literary theory might have it, dread of The Other. Suddenly, after 50 odd years of dispensing aid and the omni-prescription of market-opening commitments, liberalisation, harmonisation, free flow of capital, government investment in education and training and all the rest of it, the worst has happened. It worked. (Albeit at great cost, in a limited way, and for the chosen few.)
But instead of gratitude and docility from semi-developed countries like Thailand, India, and the Ukraine, the payback is more competition. They take our jobs whether they emigrate or stay at home. Apocalyptic flows of people and jobs are predicted, all in the ‘wrong’ direction. The cry goes up; ‘something must be done.’ But the real displacement going on is not of people, but of issues.
The US has begun its election year with the traditional lurch towards protectionism. And outsourcing is a very convenient bogeyman for an incumbent presiding over a jobless recovery – ‘it’s not that we didn’t create enough jobs, we’re losing them overseas’. But the Democrats are taking the bait, accusing Greg Mankiw of heartlessness and rubbing their hands in glee. The debate in the US, insofar as there is one (Republicans; ‘outsourcing is bad.’ Democrats; ‘no, it’s really, really bad.’) has taken quite some time to move up a gear and start talking about some of the benefits of outsourcing to the US economy.
Meanwhile, the rest of the world looks on with a bemused grin. ‘Multinational corporations are faithless and fickle and will move on to the next source of low-cost labour as quick as you can say ‘globalisation’.’ No shit. Other countries have lived for years with the risk that that the big IT firm they attracted to their spanking new industrial park (having won a bidding war against Glasgow, Lodz and Bratislava) will up sticks before even paying their negotiated rate of lower corporation tax. Entire national economies are structured according to the roll of the dice, or the simple luck to be in the right place at the right time and have a relatively cheap, eager, English-speaking workforce. But every European finance minister is looking over her shoulder for the next upstart country with a pocket full of structural funds and a crazy dream to be the next tiger economy. That’s just life.
But the benefits of outsourcing to the US economy are not the big issue here (bearing in mind that ‘here’ isn’t in the US). I wonder; what did we all think was going to happen with those aid programmes and World Bank mantras? Did we forget that the ‘developing’ in developing countries is a verb, not just a description, and that one day it might actually happen? Did we really think they’d play nice and be content to be merely another export market for the West? Wasn’t it clear that forcing open others’ markets for FDI in manufacturing and services while keeping our own markets closed in agriculture would make it rational to develop the former? And wasn’t it inevitable that forward-looking people in those countries would think to leap frog up the value chain with their technology parks and their Information Super Corridors? Because all that guff about bridging the digital divide isn’t just guff in developing countries. It is gospel. And, in small but important ways, it is starting to work.
Just as we seemed to lose sight of what it means to preach the benefits of information and communication technologies for economic growth and development, I think we’re also forgetting what is so good about outsourcing in developing countries. It is creating and supporting a middle class in countries with young or fragile democracies, or no democracy at all. Outsourcing is the market-friendly face of ‘soft power’, of making friends around the world by giving people just as big a stake in peace as the most lucky and affluent. If political arguments in the US are to trump economic reasoning that increased trade is not a zero sum game, then we need to look further afield at the political consequences of this phenomenon.
Doha showed us a lot of things, but the key lesson was that trade liberalisation in non-Western and developing countries cuts both ways. The Thailands, Brazils, and Indias are not pawns to be pushed around the board, nor are they grateful supplicantsm but real, live, self-interested actors making their own choices and finding their own way.