1. The New Offshoring of Jobs in the Global Economy
Gary Gereffi
Duke University
“Globalización, Conocimiento y Desarrollo desde la perspectiva mexicana”
Universidad Nacional Autónoma de México (UNAM), México, DF, México
15-17 de marzo, 2006

2. Main Topics Offshore outsourcing: new & old trends
Contemporary global labor market: a typology of jobs
Shifts in labor-intensive jobs: apparel
Shifts in knowledge-intensive jobs: engineering
Development dilemmas: winners & losers
We focus on three variables:
1. How complexes the information transfer between firms required to sustain a transaction?
This information could be about the product, processes, or the services associated with the product. Complexity refers to the amount of information needed to handle the specific requirements of a transaction. In other words, it refers to the extent to which the relationship between buyer and supplier has to be customised in order to meet coordination requirements.
2. How easy is to codify this knowledge? Knowledge may be complex and transaction-specific, but systems may be in place to handle this complexity of a relatively easily. These include technical standards, process standards and grading systems.
3. Supply competence in relation to the requirements of the transaction. In other words, how confident as the buyer that the supplier will meet the requirements of the transaction.

3. Starting Point Outsourcing – corporate control
move supply of goods and services from “in house” to external supplier
Offshoring – geographic location
move activities from domestic to overseas location
Offshore outsourcing – What’s new?
Types of jobs
New “drivers” of job shifts in global industries
Where jobs are going

4. Global Outsourcing of U.S. Jobs
Trends
1960s & 1970s – basic factory jobs
Shoes, clothes, electronics, toys, appliances
1980s – routine service work
Call centers, back office jobs (credit cards, banks)
1990s – advanced business services
Finance, accounting, medical records, software
2000s – design, brands, innovation

5. An Unprecedented Expansion in Global Capitalism
In 1985, the global economy consisted of 2.5 billion people (N. and S. America, W. Europe, Japan, E. Asian NIEs, Africa)
In 2000 as a result of the collapse of the Soviet Union, India’s turn from autarky, China’s shift toward a market economy, global capitalism consisted of 6 billion people

6. The Global Force Has Doubled since 1990
Source: Richard Freeman, “The real effect of globalization on labor,” Harvard University and NBER.

7. 4 Types of Jobs in Global Economy
Assembly jobs in export industries (EPZs)
“Full package” (or OEM) production jobs, associated with buyer-oriented upgrading
Advanced production jobs that require design (ODM) and marketing (OBM) capabilities, associated with supplier-oriented upgrading
Knowledge-intensive jobs in offshore services

8. and the Consolidation of the
2005 Phase Out of Quotas
and the Consolidation of the
Apparel Value Chain

9. In 2005, Multi-Fiber Agreement Ends
Quota Abolition
from 2005
MFA
(1974 – 1994)
ATC
(1995 – 2004)
Jan. 1, 1995
16% Integration
Jan. 1, 1998
Another 17% Integration
Jan. 1, 2002
Another 18% Integration
Jan. 1, 2005
100% Integration
Source: World Trade Organization.

10. Figure 1
Source: Financial Times, July 19, 2004, p. 11.

11. Figure 2
Source: Financial Times, July 19, 2004, p. 11.

12. Central America and the Caribbean Europe and the Middle East
Figure 3: Shifts in the Regional Structure of US Apparel Imports from 1996 to 20041
Northeast Asia
Southeast Asia
Central America and the Caribbean
Europe and the Middle East
China 1 2 3 4 5
Hong Kong
South Korea
Taiwan
Thailand
Indonesia
India
Turkey
Italy
Macau
North America
South Asia
Pakistan
Bangladesh
Sri Lanka
Malaysia
Philippines
Canada
Mexico
Guatemala
El Salvador
Costa Rica
Honduras
Dominican Republic
Cambodia
Vietnam
Jordan
Jamaica
The rings indicate the share of total U.S. imports in U.S. dollars by partner country:
1. 10% % - 9.9% % - 5.9% % - 3.9% % - 1.9%
Total value of U.S. clothing imports was $41.6 billion in 1996 and $72.3 billion in 2004.
1The 2004 position corresponds to the ring where the country’s name is located; the 1996 position, if different, is indicated by a small circle. The arrows represent the magnitude and direction of change over time.
Source: Compiled from official statistics of the U.S. Department of Commerce, U.S. imports for consumption, customs value.

13. Figure 4: Shifts in the Regional Structure of Japanese Apparel Imports from 1996 to 20041
Hong Kong 5
Europe
Northeast Asia
France 4
United Kingdom 3
Italy 2
South Korea 1
China
Indonesia
Thailand
North America
Southeast Asia
USA
Vietnam
Philippines
The rings indicate the share of total Japanese imports in U.S. dollars by partner country:
1. 25% % % % - 9.9% % - 3.9% % - 1.9%
Total value of Japanese clothing imports was $19.7 billion in 1996 and $21.7 billion in 2004.
1The 2004 position corresponds to the ring where the country’s name is located; the 1996 position, if different, is indicated by a small circle. The arrows represent the magnitude and direction of change over time.
N.B.: From 1996 to 2004, China’s import share of the Japanese apparel market grew from 59.4% to 80.9%.
Source: UN Comtrade, SITC 84 (“Articles of apparel and clothing accessories”).

14. Top 7 Apparel Exporters to the United States, 2000-2005*
Table 1
Top 7 Apparel Exporters to the United States, *

15. Table 2

16. MAJOR TRENDS IN THE POST-QUOTA WORLD
China will benefit most from the end of MFA quotas
Consolidation is likely to accelerate
More mega-factories will emerge post-2005
Retailers will cut down on the number of sourcing countries
Remaining factories will have to provide higher level services (logistics, customs clearance, and product design)
Time to market considerations will allow regional producers to maintain a role in apparel sourcing
Pressures for “ethical sourcing,” corporate codes of conduct, independent monitoring and labor standards will grow

17. The Rise of Engineering Outsourcing in India and China
Economic growth
Massive labor forces
Low labor costs / specific labor polices
A new emphasis on knowledge-intensive jobs
India: IT expertise
China: manufacturing expertise
Additional points: Stable environment

18. In the Media
“Last year more than 600,000 engineers graduated from institutions of higher education in China. In India, the figure was 350,000. In America, it was about 70,000”
The National Academies, Press Release: “Broad Federal Effort Urgently Needed to Create New, High-Quality Jobs for All Americans in the 21st Century”, 10/12/2005
“Last year China's schools graduated more than 600,000 engineers and India's schools produced 350,000, compared with 70,000 in America”
The U.S. Department of Education, Press Release: “In Case You Missed It: Let's Get Serious”, 2/7/2006

19. Engineering, Computer Science and Information Technology Degrees Awarded in 2004

20. 2004 Engineering, CS and IT Degrees Awarded Per Capita

21. A Breakdown of the 2004 Economic Structure of the United States, China and India
Conclusions: The majority of outsourced activity in India will be service related, in China it will be industry/manufacturing related

22. Thank you
for your attention!