Globalization, Job Creation and Inequality: The Challenges and Opportunities on Both Sides of the Offshoring Divide

Abstract

This essay analyzes issues surrounding the impact of offshoring, an iconic manifestation of globalization in its present stage, on job creation and inequality on both sides of the geo-economic divide, focusing simultaneously on the US, the leading country involved in services offshoring, and on India, the primary beneficiary of this process. The paper traces the evolution of offshoring through different stages: from manufacturing to services, and more recently, offshoring of innovative activity and R&D. Some of the questions raised by this exercise are: What are the dilemmas involved in economically feasible yet socially responsible approaches, which can help reconcile what may seem to be contradictory and conflicting objectives on the two sides? What issues come up while trying to promote job creation in developed countries and broader social development in the developing countries, in the context of offshoring?

Keywords: offshoring, outsourcing, globalization, inequality, job creation, innovation, India, US, software, technology

JEL Classification: F00, F02, F20, J30, J60