Transcript In OECD economies the big structural changes are driven primarily

Globalisation and the
knowledge economy
Ian Brinkley
Director Knowledge Economy Programme
Work Foundation
Globalisation – the story so far
• In OECD economies the big structural
changes are driven primarily by technology
and markets, with globalisation accelerating
and reinforcing these fundamental shifts;
• All OECD economies have seen an
expansion of the technology and knowledge
based industries and these have uniformly
been big generators of new jobs;
• Rapid growth in world trade and entry of
BRIC economies over past decade has been
associated with falling unemployment and
rising living standards across the OECD;
• Like all structural change, globalisation
creates highly visible losers and economic
minuses and less visible winners and
economic pluses.
Globalisation and manufacturing
•
•
•
•
•
Even in the internationally exposed sectors of the
economy such as manufacturing, trade has
accounted for between 10 and 30 per cent of jobs
lost in the decade to 2002 (Rowthorne and Coutts);
Many of the trade related impacts on jobs come from
North-North rather than North-South trade (eg cars,
engineering, high tech);
China is a low innovation, assembly economy with
many exports dominated by factories owned or
operating on behalf of US, Europe and Japanese
multi-nationals;
Some of the increase in imports from China to
Europe is replacing imports we would have otherwise
taken from US and Japanese factories;
Some economies such as the UK have been unable
to exploit the Chinese demand for high quality
production goods in contrast to, say, Germany.
Offshoring of services
•
•
•
•
•
•
No statistics on offshoring impact, so have to rely on
indirect measures, one-off studies and monitoring;
Most US studies suggest scale of actual job losses to
offshoring is very small share of “natural” job loss rate
in the economy;
European Restructuring Monitor in 2005 found just
over 5 per cent of all job losses across the EU from
restructuring due to offshoring;
UK “offshoring scare” in 2003: subsequent DTI/ONS
studies show employment went up in UK callcentres
and in occupations thought most vulnerable;
Trade in technology and knowledge based services
(excluding transport, travel and tourism) is almost all
North-North;
UK trade in services with India is small and – excluding
travel and transport – we export more services by value
to India than we import.
UK-India knowledge services trade in 2004
financial, business, high tech, cultural services and royalties and licence fees. IT related are computer,
information, and communication services. Source: Pink Book, 2006 edition.
£80
£75.0
£70
Exports from UK
£60
billions of £ (current prices)
Imports from Rest of world
£50
£40
£34.0
£30
£20
£9.0
£10
£5.0
£0.2 £0.3
£0.1 £0.2
India all KES
India IT related
£0
World all know ledge
services
World IT related
Globalisation responses to competition
from low wage manufacturing exports
• High tech manufacturing now accounts for a
higher share of exports in UK, Germany,
France compared with the early 1990s – but
not in US and Japan;
• Except for the UK, the change has been
modest and the vast majority of EU
manufacturing exports are still from medium
to low tech industries;
• There has been no shift in trade towards
services across the OECD;
• The big exception is the UK – the only major
OECD economy (so far) to specialise in
technology and knowledge service trade
Trading in ideas and knowledge - UK becomes a
world leader
Balance of trade as share of GDP in 2005
WF definition: business services, finance, high tech, telecommunications, cultural,
education: Source: Eurostat/OECD. All figures 2005 except Japan, 2004.)
4%
4%
3.3%
3%
3%
2%
2%
1%
0.5%
1%
0.0%
0.0%
-0.3%
-0.8%
Germ any
France
Italy
Japan
0%
-1%
-1%
-2%
UK
US
Looking to the future – are we
being too complacent?
• Unprecedented scale of Chinese and Indian
economies makes previous experience with
OECD Asian economies unreliable guide;
• Technology and increased supply of
knowledge workers will create “high skilllow wage” economies across the OECD;
• The first “great unbundling” of
manufacturing production to Asia will be
followed by a second “great unbundling” of
service jobs;
• The “great doubling” will flood world labour
markets with unskilled, capital poor labour –
pushing wages down among unskilled
workers.
Looking to the future – an
alternative view
•
•
•
•
Although trade will become more important as an
agent of change, technology and markets will
remain the key drivers of economic restructuring
in major OECD economies;
The pace of structural change in the exposed
sectors of the economy – manufacturing and
some knowledge based services - will speed up
as both North-North and North-South trade
increase;
Big potential markets in non-OECD economies
from what the World Bank terms the “global
middle class” who will actively participate in the
global economy and demand high quality
products and high quality services;
Global supply of “knowledge workers” may
struggle to keep up with demand, with OECD
economies increasingly competing to attract
“brightest and best”.
Looking to the future – how do
we cope?
•
•
•
•
A more mature political and public debate – too
easy for politicians and pundits to blame
globalisation for all the economic and social ills
of the world;
Investment in human capital at all levels,
including expanding higher education, and
developing the science and technology base;
A key issue will be how to cope with ever faster
structural change – whether generated by
technology or trade – and ensure individuals and
communities that lose out are effectively helped
and compensated;
One option is to move further towards the
“flexisecurity” model of Nordics and Netherlands
– liberal markets (including liberal migration
policies), strong active labour market policies
and more generous but employment friendly
social welfare safety nets.