Capitilizing The Philippines

One of my favorite discussion topics these days is globalization and how the Internet is allowing all manner of knowledge work to be outsourced to 3rd World countries, and the wealth being created in both countries that become involved in these type of commerical win-win transactions.

A common response from 1st World conversants is that the wealth dispartity between 1st World and 3rd World countries will be lessened, thus causing the standard of living for Americans to fall in relation to the faster increasing standard of living of 3rd World countries.  The implication is that the 1st World thus loses out in the relationship as their superior ratio diminishes.

I take issue with this for several reasons.  First, implicit in globalization is a leveling of the playing field. As the boundaries and barriers between countries shrink, so too must capital take root in there.  Leveling the playing field is a good thing.  The disparity that has always existed between the richest and the poorest is not something the rich should be proud of.  There’s absolutely nothing wrong with being rich, but there is something wrong with the idea that the rich can only stay that way by keeping the downtrodden down.  This comes from the fixed-pie syndrome, where so many people think that the pie is only so big.  The pie is not of fixed size.  The more cooks in the kitchen, the bigger the pie.  While one cook may be able to feed a large family, six cooks can feed an army.

Second, since globalization is inevitable, being for it or against it is irrelevant, Having opinions about the results that globalization brings is like being a home team sports fan.  You may want to see your home team win, but since half of a team’s games are played away from home and each team has fans, a fan’s opinion about his home team is largely irrelevant to teams overall success.

Third, while the overall ratio of wealth of the 3rd World countries engendered with outsourcing 1st World knowledge work may increase, the bulk of that new wealth often finds its way into the hands of the already affluent, thus increasing the disparity between the poorest and the richest in the 3rd World country.  There is little trickle down effect upon the masses.  I believe this has more to do with the lack of uniform access to legal property systems, the ease, or lack thereof,of creating start-up companies.  It is much more difficult, in The Philippines, for example, for an individual entreprenuer to create a new and legal service business than it is for an American to do the same.  Thus, those new start-ups inevitably fall into the hands of those already well-established in the business sector.

Without the legal infrastructure to support idea men in forming and owning these new knowledge-work, fiber-optic delivered service companies, the 3rd World will simply never catch up.

This entry was posted on Monday, September 18th, 2006 at 04:23 and is filed under Globalization, Offshoring. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.