Offshoring by Alan S. Binder - Article Example

The effect of this will be to relocate many millions of jobs away from richer countries and towards poorer countries like India which has an educated, English speaking workforce with lower wage costs. Binder recommends that America should resist the temptation to engage in protectionist activities because these shifts are inevitable, but to promote instead workforce flexibility, aids to transition towards personal and local services, and better safety nets for displaced workers. The current transformational initiative of US economic reform is compatible with this next industrial revolution because it aims to maintain the principle of free trade, and this is a major requirement for success in this new world situation.

There are dangers, however, that ever-increasing health, pension, and welfare costs, along with strong resistance from well- educated and vocal workers who see the rise of competition from workers in other countries as a threat will reduce America’s stability and competitiveness. There may even be a backlash calling for more trade barriers. There is a big agenda issue in terms of educational reform also, which America will need to address more urgently. Workers need to be trained for flexibility and to take more responsibility for employment insurance and pensions.