As the jobs of the first world make their way to the developing regions of the third world, the forces of globalization have had many unintended consequences. The loss of manufacturing jobs in the countries of the world and their movement to the lower paying developing “third world” has restructured the world economy. This brief assignment will explore the globalization phenomenon with an eye to outsourcing and the changes dynamics of the global economic community. Asking the question, what is protectionism and in which way does it affects International Business in the current economic crisis, we will analyze protectionism as the result of outsourcing. This analysis will utilize a case analysis and explore two countries which have embraced free trade and economic growth as a haven for outsourcing. China represents a unique blend of authoritarianism and capitalism leading to sustained and pronounced economic growth in one of the largest – and growing - economies in the world (Lee 1996; Bhagwati 2008).
Globalization, as it exists today, rests largely on the shoulders of neoliberal economics and the global entrenchment of capitalism as the dominant economic system in the world. Neo-liberalism, the belief in laissez-faire economics, was best articulated by Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States in the 1980s. Outsourcing is an integral component of the globalization phenomenon and a key aspect of the global division of labour. Thomas Friedman, in his immensely popular book The World is Flat (2005), describes outsourcing as an integral component of the worldwide spread of capitalism and the global division of productive labor. According to Friedman, outsourcing is primarily done in response to keep costs low and restructuring ones’ labor force in order to keep production costs at a minimum. Accordingly, while a non-skilled manufacturer in Illinois can expect to earn a minimum of $14 an hour, in a