offshoring: lectures

What is a service economy?

An economy focused on the production of intangible services rather than physical goods or raw materials.

What sectors are included in the service economy?

Education, health care, tourism, finance, consulting, and food services.

How has the economic structure changed over the last 50-70 years?

Services have expanded while agriculture and industry have declined.

What percentage of global employment do services account for according to the WTO?

Approximately 50% of global employment.

What proportion of global GDP is generated by services?

Over two-thirds of global GDP.

What was the percentage of the Canadian workforce in agriculture in 1867?

Approximately 50%.

What major shift occurred in Canada by 1987 regarding the workforce?

Agriculture accounted for less than 4% of the workforce, with services dominating.

What historical belief about manufacturing has changed?

The belief that manufacturing mattered more than services due to productivity and tradability.

How did technological advances affect the trade of services?

They made services easier to trade globally.

What does deindustrialization refer to?

The decline of manufacturing's share of employment and GDP.

What caused deindustrialization?

Mechanization and productivity gains that freed labor.

What was the population of Detroit in 1950?

1.8 million.

What significant event occurred in Detroit in 2013?

The city declared bankruptcy.

What was Pittsburgh known for in the early 20th century?

Being a major steel center, producing 60% of U.S. steel by 1910.

What industry replaced steel as the main employer in Pittsburgh by 1980?

Health care.

What type of jobs emerged in Pittsburgh's service economy?

Largely low-paid, non-union jobs often held by women.

What does the U-shaped income structure in service economies indicate?

High-paid professionals, a large low-wage service workforce, and a weak middle class.

Which cities became global service hubs in the 1980s?

New York, London, and Tokyo.

What was a notable trend regarding economic power in global cities?

Economic power became centralized rather than dispersed.

How did global cities connect to each other in terms of economy?

They became more connected to each other than to their national economies.

What is offshoring?

The establishment of facilities abroad to produce goods for the home market, differing from foreign direct investment (FDI) and outsourcing.

What is finance offshoring?

The practice of moving banking operations abroad to avoid taxes and regulations, exemplified by the Panama Papers in 2016.

How did manufacturing offshoring contribute to deindustrialization?

It led to a decline in manufacturing jobs in advanced economies and a growth in the service sector.

What historical event in the 1500s marked the beginning of offshoring?

European colonial trade involving commodities like sugar, cotton, and oil.

What institutions contributed to the boom in offshoring post-WWII?

GATT, IMF, and the World Bank.

Which country led offshoring in electronics during the 1960s?

Japan.

What was a significant trend in the 1970s regarding semiconductors?

High-tech design was done in developed countries while assembly occurred in low-wage countries.

What are global production strategies?

Strategies that spread production stages across countries based on labor costs, technology, and stability.

What are some challenges associated with offshoring?

Fragile global systems, coordination issues, and the retention of R&D in home countries.

What are the criticisms of production offshoring?

Lower wages, weakened unions, and avoidance of regulations.

What was the impact of offshoring on the US job market?

Millions of jobs were lost, leading to increased wage inequality.

What was the significance of the 1906 De Beers case?

It established that residency equated to real control, affecting tax liabilities.

What trend was observed in offshore financial centers?

They disproportionately served foreign clients and facilitated tax avoidance.

How much did cross-border banking assets grow from the 1970s to 2020?

From $1 trillion to $30 trillion, representing 8-10% of global GDP.

What were the effects of finance offshoring on tax revenue?

It resulted in lost tax revenue and enabled secrecy in tax evasion.

What common factors accelerated both production and finance offshoring post-1970s?

The end of Bretton Woods, decolonization, globalization, and advancements in technology.

What role did multinational enterprises play in offshoring?

They were key players in the acceleration of both production and finance offshoring.