Offshoring backlash: an ‘un-level’ playing field?

Basab Pradhan, an old IT industry hand and now entrepreneur, has written recently about the growing backlash against off-shoring, something that might play well into the hands of politicians in the Presidential race for 2008. He highlights that many dyed-in-wool free-trade advocates are now making noises about the previously unforeseen downsides of globalisation, and this Wall Street Journal article does not make pretty reading. Needless to say, reductionist economic analyses never quite paint the full picture.

Protectionist domestic industrial policies were what made today’s so-called industralised nations the ‘First World’. Nevertheless the First World, the North, whatever your preferred term may be, has been very active in attempting to prevent the Third World (or the Emerging Economies, the South, whatever you prefer) from exercising any protectionist measures in an increasingly globalised economy. For some examples, see under quantitative restrictions. They are also countering with increasingly complex measures, tantamount to non-technical barriers to trade, against the growing economic competitiveness of China, India and other similar players. For some examples, see under anti-dumping measures.

The tide may however be turning. Even outside the World Trade Organisation, companies from emerging economies are beginning to assert themselves, for instance, in this patent dispute where a Chinese firm is suing a US firm for IP violation.

Particularly in the context of the role of Information and Communication Technologies in national competitiveness, the US probably needs a different strategy now, rather than the simplistic and reductionist framing of offshoring as the root of all evil. A recent World Economic Forum report suggests that it has as much to fear from small European nations as it might have to fear from the emerging behemoths India and China.

Closing one’s eyes and ears to the new power balance shaping up might not be wise, especially for the Presidential hopefuls, even if it means that the road to 1600 Pennsylvania Avenue looks certain by playing this card.

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