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Global labor arbitrage

Shift of jobs to more inexpensive nations

Summary

Shift of jobs to more inexpensive nations

Global labor arbitrage is an economic phenomenon where, as a result of the removal of or disintegration of barriers to international trade, jobs move to nations where labor and the cost of doing business (such as environmental regulations) are inexpensive and/or impoverished labor moves to nations with higher paying jobs.

labor supply]] by integrating foreign jobseekers who often work for low wages.

Two common barriers to international trade are tariffs (politically imposed) and the costs of transporting goods across oceans. With the advent of the Internet, the decrease of the costs of telecommunications, and the possibility of near-instantaneous document transfer, the barriers to the trade of intellectual work product, which is, essentially, any kind of work that can be performed on a computer (such as computer programming) or that makes use of college education, have been greatly reduced.

Often, a prosperous nation (such as the United States) will remove its barriers to international trade, integrating its labor market with those of nations with a lower cost of labor (such as India, China, and Mexico), resulting in a shifting of jobs from the prosperous nation to the developing one. The result is an increase in the supply of labor relative to the demand for labor, which means a decrease in costs and a decrease in wages.

Forms of global labor arbitrage

Global labor arbitrage can take many forms, including but not limited to:

Foreign outsourcing

Main article: Offshore outsourcing

Capital moves to nations with cheap labor, lower taxes and or fewer environmental regulations or other costs of doing business for the purpose of producing goods and services for export to other markets. The classic example is the case of a factory or office closing in Nation A and then moving to Nation B for the purpose of producing goods or services at lower labor costs for export back to Nation A's market. This can result in layoffs for workers in Nation A. For example, in the United States, the amount of manufacturing jobs has decreased while the importation of manufactured goods from other nations has increased (along with the United States' trade deficit). These trends are now affecting the service sector as well.

Notes

References

The "global labor arbitrage" phenomenon has been described by economist [[Stephen S. Roach]]. See Mike Whitney, [http://www.entrepreneur.com/tradejournals/article/147390483.html "Labor arbitrage,"] ''Entrepreneur'', June 2006.
Miszczynski, Milosz. (2016-06-22). "Labour arbitrage: the lifecycle of a global production node". Journal of Organizational Ethnography.
Nadeem, S (2009) [http://nadeem.commons.gc.cuny.edu/files/2010/04/Nadeem_Global-Networks.pdf "The Uses and Abuses of Time: Globalization and Time Arbitrage in India’s Outsourcing Industries,"] ''[[Global Networks]]''.

Wikipedia Source

This article was imported from Wikipedia and is available under the Creative Commons Attribution-ShareAlike 4.0 License. Content has been adapted to SurfDoc format. Original contributors can be found on the article history page.

arbitrage international-trade global-workforce offshoring economic-globalization

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