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The Impact on Advanced Economies of North-South Trade in Manufacturing and Services

By Robert Rowthorn

Social Science Research Council, July 1, 2005

Social Science Research Council (SSRC)
The Development Imperative: Toward a People-Centered Approach, New York: SSRC, 2005, 87-105.

Executive Summary

This paper examines some of the issues raised by the new division of labor that is now emerging. It is primarily concerned with the rich economies of the North, in particular with the employment impact of trade with low-wage economies. In view of current protectionist sentiments in the North, this is an important topic.The paper begins by describing what has already happened in the manufacturing sector.This is followed by an examination of the rapidly growing North-South trade in services, in particular the development of “offshoring,” whereby service activities that were previously performed at home are transferred to other countries. The paper concludes with a brief case study which illustrates why competition with low-wage economies is a subject of legitimate concern in rich countries.

Copyright 2005 SSRC For permission to use or further distribute this paper, please contact the SSRC.

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