PROBLEM SET 2
OFFSHORING: THE NEXT INDUSTRIAL REVOLUTION?
As the amount of things tradable keeps increasing, there is a phenomenon that
grows with it, the ‘offshoring’, the migration of jobs (but not the people who perform them)
from rich to poor countries. And, it will continue advancing with the new technologies and
global communications.
Workers in rich countries see this phenomenon as an enemy, but as it happened with
the first two industrial revolutions, they will not produce a massive unemployment, just a
reallocation of human force that finally favors humanity. The First Industrial Revolution
reallocated the labor in factories, and the second one in the service sector. Now, in the
beginning of a third industrial revolution (the information age), we might adapt to the new
circumstances just as we did in the previous ones. However, not all jobs are equally
“threatened”, manufactured goods are not affected, but the critical division between jobs
offshored in the service sector will be between those that are easily deliverable through a
wire (impersonal services) and those called personal services. Nonetheless, the frontier
between these two types might be shifting over time. As a consequence, the prices of
personal services will keep rising (“Baumol’s disease”), making people consume them less.
Nevertheless, offshoring must not be avoided, countries just need to take the
measures necessary to grow and adapt to it (data systems, trade policies, educational
systems, social welfare programs, and politics). But nowadays we are still unable to make
real predictions on how this industrial revolution will develop and how it will affect humanity.
