Stakeholder Position: U.S. Government (World Bank)
The objective of governmental institutions like the World Bank and the International Monetary Fund (IMF) is to provide a globally regulated financial center. Among the most important services that these financial centers provide are loans so that countries that are developing can be more stable economically. The World Bank and IMF have been successful in their efforts. A survey conducted by the BBC indicates that most countries view the World Bank favorably. According to the article, “the global public clearly sees it as positive that there are international institutions that seek to address the problems of poverty and economic instability, and on balances see them doing more good than harm...countries that have been recipients of World Bank loans are particularly positive about the influence. Africans are especially enthusiastic –Kenya (81% rated it positively), Tanzania (79%)...” From this, it is evident that developing countries are truly benefiting from the World Bank’s efforts.
A big part of the efforts of the United States to help developing countries be viable and autonomous is the practice of outsourcing. Outsourcing is a partnership between the United States and other countries in which the United States moves factories overseas to foreign workers. Through outsourcing, the Unites States provides workers overseas with a job. Many of these people are workers of poor countries and without much opportunity in terms of finding a job. This is known as a division of labor. Our policies have been consistent with this goal. The World Bank published a pamphlet called “10 Things You Never Knew About the World Bank.” In it, the World Bank points out that “Our work in over 100 countries is challenging, but our mission is simple: to help reduce poverty. Over the past 20 years the proportion living in poverty in the developing world fell by half –from 40 percent to 21 percent.” This demonstrates how extensively the World Bank’s success in ending poverty has been. This is a legacy that the World Bank will only build on as it continues its work into the future.
There is a misconception that most of the outsourced jobs are going to cheap labor so that the United States can take advantage of foreign workers for lower pay. In fact, a lot of the jobs that are being outsourced are for high skilled positions that require use of technology and direct communication with consumers. An example of this are the jobs in medical research, in areas like radiology, drug discovery and testing, and clinical trials, that are going to India. This is having a positive effect in India, as the education system is being vamped up to produce workers capable of filling these positions. Sarosh Kuruvilla, a professor at Cornell, said “Given the established link between investment in capital and economic growth, developing countries have a strong interest in fostering continuous skills improvement…The key implication for Indian workforce development is a major reform in its higher education system to produce more and better researchers, scientists, and engineers. This involves wholesale rethinking of higher education, not just small-time tinkering.” Other high skilled jobs that are being outsourced are jobs in software development and graphic design and, according to an article in “Outsource Portfolio”, more companies are sending high skilled IT jobs like application development and project management overseas. In order to accommodate these kinds of positions, third world countries are improving their workforce through education. This benefits the worker immensely, as it will put the worker on a more even keel with other workers worldwide. From this success comes larger salaries, which contributes to the economies of third world countries. Furthermore, this trend will continue as these high-skilled workers will be able to pay for their children to be well educated. This cycle will continue, resulting in a more educated populace. It is true that some of the jobs outsourced are also targeted at low skill labor and that they are being paid less than workers in the United States would be, so companies in the United States do save money by outsourcing. But the wages that are being paid to these workers are livable wages. Developing countries have lower costs of living, so the workers of these countries do not need a United States-level income. They are easily able to survive on what we pay them. Outsourcing benefits many people on many levels –companies save money, workers in developing countries get are given jobs, and the economies of developing countries prosper.
Outsourcing has become an integral part of the U.S. economy and one would be hard-pressed to find a way to reverse this practice. As Mark Thornton, an economist, points out, “If we were to reverse this form of outsourcing, the U.S. economy would be dealt a major blow. Prohibiting any new foreign outsourcing would also be a big blow to the economy and our future. There have been several suggestions for curtailing foreign outsourcing involving regulations and changes in the tax code, but most of these would have the effect of stopping most foreign outsourcing altogether…Putting limits on foreign outsourcing will make the U.S. a less desirable location for employers and would put American companies at a disadvantage compared to foreign competitors in Europe and Japan, who can continue to rely on the low-cost advantages of foreign outsourcing. As such, the ability to outsource work to other countries is crucial for both new job creation and saving current American jobs from foreign competition.” Discontinuing outsourcing would not only be detrimental to companies within the US, but also for the workers and economies of developing countries. If outsourcing is discontinued, those workers who are currently employed would be out of a job, which would be bad for them on an individual level as they will struggle to find a way to make a living. Some may even have families depending on the money that they bring home to buy necessities like food and clothing. Ending outsourcing would also hurt the economies of third world countries. Workers with less income means fewer people contributing as consumers. This is why we cannot stop outsourcing.
Furthermore, outsourcing is not the demon it’s made out to be. An article published by Tim Kane, Brett Schaefer, and Alison Acosta Fraser, points out ten myths of outsourcing. The first myth is that America is losing jobs. Their response to this myth is: “There are 138.3 million workers in the U.S. economy today –more than ever before.” They also addressed the fear that unemployment is increasing. They refute this by pointing out the “surging labor force…There are now 2.03 million more people in the labor force than in late 2001.” We are currently seeing an unprecedented number of people in the workforce and that workforce is continuing to grow. Outsourcing is not taking jobs away from Americans. Myth #3 is “Outsourcing will cause a net loss of 3.3 million jobs.” In fact, as Kane points out, “Outsourcing has little net impact, and represents less than 1 percent gross job turnover.” And, as we stated before, the job force has never been larger. Myth #4 is that “Free trade, free labor, and free capital harm the U.S. economy.” Kane’s answer to this is: “Economic freedom is necessary for economic growth, new jobs, and higher living standards…a strong positive relationship between economic freedom and per capita GDP.” An outsourced job is not a job lost, according to Kane because “Outsourcing means efficiency. Outsourcing is a means of getting more final output with lower cost inputs, which leads to lower prices for all U.S. firms and families. Lower prices lead directly to higher standards of living and more jobs in a growing economy.” Also, outsourcing is not a practice carried on exclusively by the U.S. In fact, other countries are bringing jobs into the U.S. through outsourcing. “The number of jobs coming from other countries to the U.S. (jobs “insourced”) is growing at a faster rate than jobs lost overseas. According to the Organization for International Investment, the numbers of manufacturing jobs insourced to the United States grew by 82 percent, while the number outsourced overseas grew by only 23 percent. Moreover, these insourced jobs are often higher-paying than those outsourced.” Perhaps the most disturbing myth is one that I addressed above –that only greedy corporations stand to benefit from outsourcing relationships. Kane refutes this by saying “Everyone benefits from outsourcing. Outsourcing is about efficiency. As costs decline, every consumer benefits, including those who lose their jobs to outsourcing.”
Outsourcing is a beneficial practice for all parties involved. It is only because of exaggerations and misrepresentations that outsourcing has become misunderstood by many who consider it immoral. On the contrary, to put an end to outsourcing would be counterproductive. Many would suffer: the worker who will be out of a job, developing countries’ economies, and American companies. Through outsourcing, the United States is sending skills (including high skill jobs) to developing countries and through insourcing, the United States is receiving workers from foreign countries. This is an exchange that results in partnerships that help economies stabilize each other. It is because developed countries like the United States have taken the initiative and created the World Bank and IMF that many developing countries have made strives to reduce poverty. These institutions have come to the forefront in regulating worldwide globalization through practices like outsourcing. Considering the financial crisis that we, as a global community are in, it has never been more important to have a forum for communal exchange in resources and wealth.
Works Cited:
Thornton, Mark. "How Outsourcing Creates Jobs." LewRockwell.com. 11 April 2004. 13 May 2009
Crawford, Franklin. "High-skilled jobs in finance and medical research going to India, study shows." ChronicleOnline. 12 July 2007. 16 May 2009
Kane, Tim. "Ten Myths About Jobs and Outsourcing." Heritage.org. 12 July 2007. The Heritage Foundation. 16 May 2009
"High skilled IT and BPO jobs are going offshore."Outsource Portfolio. 4 Nov 2008. 18 May 2009
