"His theory utterly fails to explain why most capital leaving the United States, including manufacturing investment, flows to other high-wage countries, such as Canada and Europe."
If it cost nothing to set up shop in India then, by definition, zero US capital investment would flow to India.
If it cost nothing to set up shop in India then, by definition, zero US capital investment would flow to India.
Exactly. Griswold concentrates only on the movement of capital, not of jobs. Regarding the number of jobs expected to be outsourced, following is an excerpt from an article titled "Pink Slips Continue Unabated Over U.S. Technology Drain" that can be found at http://news.tradingcharts.com/futures/1/8/39313681.html:
“A grassroots movement to stop offshore is emerging. On June 23, the AFL-CIO gave testimony before a U.S House of Representatives Committee on Small Business and quoted a study, by Forester Research, that estimates 3.3 million jobs and 136 billion in wages to shift overseas in the next decade. A survey by DeLoitte Research forecasts a shift of 2 million jobs and 356 billion by 2008, and this is just within top 100 financial services firms. Both studies paint a bleak picture for white-collar technology jobs."
Regarding the target countries for the outsourced jobs, it states:
“India for now is, by far, the biggest but not the only beneficiary of this trend. Russia, China, and others, with an educated and cheaper workforce, are getting involved as well. Every year hundreds of thousands of college grads, in those countries, with degrees in computer science, are replacing U.S. programmers, and unfortunately this trend has just begun.
The DeLoitte Research survey can be found at http://www.deloitte.com/dtt/cda/doc/content/dtt_research_fsi_offshorefinance_063003.pdf. Concerning the number jobs expected to be outsourced in the financial-services area, it states:
We estimate that 13 million people are employed in financial-services jobs in mature industrial economies. Taking the same 15 per cent cost savings, this translates into the potential movement of up to two million jobs.
Regarding where the jobs are expected to go, it states:
In the future, we anticipate that offshore activity will be spread around the Indian Ocean Rim — from South Africa, through the Indian sub-continent, to China, Malaysia and down to Australia. The hub market will be India, potentially accounting for as many as one million new positions from offshored financial services.