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Offshoring: the Next Industrial Revolution?


Submitted By sunhein
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International Human Resource Management and Organizational Behavior I
29th of March 2012

The next industrial Revolution?

Summary The article consists of the idea that the third industrial revolutions is coming within the next couple of decades. Economists believe that this in merely an international business as usual, and that it will improve each nation comparative advantages. This revolution will not include shifts from the agriculture to the manufacturing, nor the manufacturing to the service sector, but will consist of offshoring of service jobs from the richer countries to the poorer ones, since the labor is cheaper there. The article takes Blinders thesis, and tells us about the positive aspects of it, and the negative. Economic theorists accordingly divide the world’s goods and services into two bins, tradable and nontradable, and it moves only in one direction, that is, more and more items become tradable. People say that the third industrial revolution will require vast and unsettling adjustments, and that we have done that before with the other two revolutions. We should not fear, since according to the other two, the revolution will not mean the end of service jobs, nor cause widespread unemployment. Also not all service jobs can be offshored. The world gained a lot from the first two revolutions, and is likely to do so from the third one as well. The article also focuses on improving the safety net in the USA to support works that lose their jobs, and the “Cost disease” of the personal services. The cost disease tells us that in many personal services, productivity improvements are either impossible or highly undesirable. But the bottom line is that offshoring should not be exaggerated, the third Industrial Revolution will not drive all impersonal services offshore.

Blinders core thesis Blinders thesis states that 30 – 40 million

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