Ashok Deo Bardhan

The New Wave of Outsourcing

This paper assesses the potential impact of the ongoing phenomenon of services offshoring (frequently referred to as outsourcing, in the media) by analyzing the occupational structure of the US labor market. It develops a list of occupational attributes of offshoreability, points out the institutional characteristics, wage-differences and other features of the recipient economies, such as India, and compares and contrasts manufacturing and services offshoring. The paper suggests that 14 million jobs or 11% of the employed labor force is vulnerable and at-risk to offshoring. The authors also look at the potential impact of offshoring on real estate and on regional/metropolitan areas in the US, and speculate about future economic-adjustment scenarios.

Global Financial Integration and Real Estate Security Returns

Have globalization and increasing economic and financial integration affected the rates of return of publicly traded real estate companies around the world? Using a set of multi-factor models for annual data for 946 firms from 16 countries over the sample period, 1995-2002, we estimate the impact of a countrys economic openness on returns of publicly traded real estate firms, controlling for the effects of global capital markets, domestic macro-economic, and firm-specific variables. We find that a countrys real estate security excess (risk-adjusted) returns are negatively related to its openness. The results are robust across different multi-factor model specifications, and suggest that real property market efficiency may have been enhanced for non-tradable goods such as real estate in globalizing economies.

A tale of two sectors: Upward mobility and the private housing market in Singapore

Abstract Our paper examines the determinants of new private residential units sold in Singapore during the 1990s. The Singapore housing market is characterized by the coexistence of a dominant public sector and a small, growing private sector with relatively higher quality housing. The distinguishing feature of our model is that we account for the impact of the former on the latter, and the interaction between the two. Our analysis generates three principal conclusions: first, there is a statistically significant “wealth effect” driving the sales of new private residential properties. Second, the real loan interest rates have a statistically significant negative impact on these sales. Finally, an increase in the rate of change of public housing resale prices has an important and significant positive impact on the sales of private residential units. This is due in part to mitigation of downpayment constraints of upwardly mobile households.

Competitiveness and an Emerging Sector: The Russian Software Industry and its Global Linkages

This paper analyzes the Russian software industry in the context of trade in information technology services. We assess Russias underlying sources of competitive edge in software, such as its scientific establishments, education system, diaspora and low costs, and identify the institutional impediments to growth. A survey reveals that foreign outsourcing contracts, a high value‐added niche and high education levels characterize Russias small, privately held software firms. A comparison with the Indian software industry underscores the structural differences in outsourcing relationships developed by the two countries and emphasizes that national advantages are complex amalgamations of many factors and need to be overtly marketed. Beyond the resources that give comparative and competitive advantage to a transitioning economy, a critical role is played by powerful industry organizations and by non‐market state institutions that can level the economic field and inject credibility into market structures.

How responsive is higher education? The linkages between higher education and the labour market

Higher education is considered vital for developing a productive and dynamic labour force to meet the demands of the global economy. How effectively does the US higher education sector respond to labour market signals? We match US postsecondary degree completions from 1984 to 2008 with occupational employment statistics and employ an Instrumental Variable (IV) strategy to examine the supply response to changes in occupation specific demand. The supply of educated workers appears weakly responsive to short-term wage signals and moderately responsive to long-term employment conditions. Analysis reveals a sizeable degree of heterogeneity and lag in the responsiveness across specific occupation–degree pairings. Failure to respond rapidly to changes in labour demand may be one factor driving inequality in wages across occupations and in the aggregate economy. We suggest some simple policy measures to help increase the responsiveness of the higher education sector, both in terms of the output of specific degree programmes and the overall mix and composition of graduate completions.

Globalization and Restructuring during Downturns: A Case Study of California

Restructuring through foreign outsourcing, whereby greater imports of manufactured inputs substitute for blue-collar labor, is shown to intensify when industries experience declines in sales. The magnitude of this effect was four to seven times greater in California industries experiencing a 20 percent sales decline from 1987-1992, relative to those industries whose sales dropped by 5 percent. Foreign outsourcing explains a quarter to two-fifths of the rise in payroll inequality between blue and white collar workers in California and perhaps five to ten percent of the rise in the remainder of the U.S. Past work linked growing inequality with foreign outsourcing and restructuring with economic downturns. Here, foreign outsourcing is used as an example of a particular efficiency augmenting measure, which occurs predominantly, though not exclusively, in troubled industries. Copyright 2001 Gatton College of Business and Economics, University of Kentucky.

Of Subprimes and Subsidies: The Political Economy of the Financial Crisis

The US economy is in the early stages of what looks to be the worst financial and economic crisis since the Great Depression. Starting with the downturn in the housing market and rising foreclosures, the crisis has spread to Fannie and Freddie, the government sponsored enterprises, and to investment banks and other financial entities holding dodgy assets backed by collapsing real estate. In addition to the growing financial crisis, a number of other, related issues of concern keep appearing on the horizon. They include sustained global imbalances, the threat of growing prices of commodities and oil, and the ever-present disruptive impact of globalization. Is there any connecting thread between these crises? What are the underlying ideological and politico-economic factors that fed the growth of this crisis? This paper addresses these and other questions in a discussion starting with subprime mortgages and their causes and consequences.

Globalization, Job Creation and Inequality: The Challenges and Opportunities on Both Sides of the Offshoring Divide

This essay analyzes issues surrounding the impact of offshoring, an iconic manifestation of globalization in its present stage, on job creation and inequality on both sides of the geo-economic divide, focusing simultaneously on the US, the leading country involved in services offshoring, and on India, the primary beneficiary of this process. The paper traces the evolution of offshoring through different stages: from manufacturing to services, and more recently, offshoring of innovative activity and R&D. Some of the questions raised by this exercise are: What are the dilemmas involved in economically feasible yet socially responsible approaches, which can help reconcile what may seem to be contradictory and conflicting objectives on the two sides? What issues come up while trying to promote job creation in developed countries and broader social development in the developing countries, in the context of offshoring?