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Geography 3422A/B Study Guide - Jack Welch, Offshoring

Course Code
GEOG 3422A/B
Milford Green

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The Story So Far 2/26/2013 7:47:00 AM
The Story So Far
Originally the rich world’s manufacturing firms largely produced in
the rich world for the rich world, and most services were produced
close to where they were consumed
o Then Western firms started sending manufacturing work
abroad on a large scale and by the 1980s this was well
o The movement was overwhelmingly in one direction: away
from rich countries to places where workers with adequate
skills were much cheaper
Jack Welch, then chief executive of General Electric, said the ideal
strategy for a global company would be to put every factory it
owned on a barge and float it around the world, taking advantage
of short-term changes in economies and exchange rates
The economic benefits of offshoring have been immense:
o For workers in low-cost countries it has meant jobs and
rapidly rising standards of living
o Rich-world workers have been able to leave the drudge work
to someone else
o Lower labour costs have brought higher profits
o Western consumers have enjoyed access to more goods at
lower prices than if production had stayed at home
But offshoring from West to East has also contributed to job losses
in rich countries, especially for the less skilled workers
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