With all the talk of the down turn in construction and the havoc that has raised it is one of the safest industries in the country. The next phase of the global economic evolution is off-shoring and a rate we have yet to see.  Ireland can no longer compete with the likes of China for manufacturing. Even the fact that we have the much praised 12.5% corporation will not save Irish jobs. They will move to the likes of China. Everyone knows this is happening. This is nothing new and nothing that has not already been talked about. But what is not mentioned much that the communications revolution that has given rise to the likes of this blog is changing the world.

There is generally two types of manufactured goods. The ones that can be shipped and those that can not be. A house cannot be shipped. Others like a computer can be shipped around the world all it needs is a box. Whether it is made in Limerick or Vietnam a box is a box, a postman is a postman to the end receiver of the product. Now this is generally peoples idea of manufacturing being off-shored. But think about it not every manufactured product comes in a box. Many come or can come virtually.

I am currently typing this in the UK. I could be typing this in Ballyporeen or I could be typing this in Shanghai. To you the read it does not make much difference. I could be writing this in a newspaper (All be it with one with poor standards to give me a column but lets just pretend) anywhere in the world and the reader would know no different. So why does this person need to be in the country? You get your accounts done by your accountant, do you need to meet them face to face? You get your house drawn by a professional do you need to see them face to face? We are already seeing with call centers the fact that where the other person on the end of the line is does not matter. What matters is do they do the job. And as we can see with call centers they do. 

Unions battling to stop companies moving are fighting a battle they can’t win. Neither will introducing protectionism into the market stop it. As Mr Universe said in the excellent Serenity. “You can’t stop the signal”. Services delivered over the net or phone can never be stopped without a toltalitarian model of phone monitoring. 

One thing that is not mentioned often about outsourcing is that it has limited gains. If companies move to cheaper places like China. Not only will they dent the economies that they leave thus denting their market but they also add to the economies that they move too. Recently it was announced that China’s competitiveness had fallen this was mainly due to double digit rise in Labour costs. With rising wages comes rising standards of living. Countries like China eventually will not be the sweat shops of the world. As they will be in the same position as we are in at the same standard. Thus the reason for moving from Ireland to China is gone. Then the companies can move on to Africa. But the same thing happens again. The countries prosper and eventually there is no more cheap labour in the world to move too. So the countries will eventually find a place to settle. But with the rise of standards of living also comes the desire for stuff. Ipods, TV, Prada, etc. Creating a greater consumer drive for products and services leading to more jobs worldwide.

With the rise of the economies in these countries so to will the level of education in these countries. Thus they will be able to compete with Ireland for the high level jobs.

In Offshoring The Next Industrial Revolution by Alan S. Blinder in Foreign Affairs said that “just as with the first two industrial revolutions, massive offshoring will not lead to massive unemployment. In fact, the world gained enormously from the first two industrial revolutions, and it is likely to do so from the third so long as it makes the necessary economic and social adjustments.”

Now his answer was that we need to focus on personnel service industries. Where face to face interaction is needed such as taxi drivers and doctors. But what I disagree with there is the fact that face to face services will only keep money in the economy. If people buy their stuff outside the country then money is leaving the economy. If there is no services that bring in an equal amount money then we will have a massive balance of payments deficit. 

So what we need to do is innovate to create the initial patented idea’s and products in Ireland so that the financial benefit comes to Ireland. Where as there is only some many accounts that one can file. There is no limit to good ideas. Every good idea is of value. 

By building our economy on a layer of innovation with roots made up of face to face industries such as what Alan S. Blinder suggests then maybe we will come out of the global shake-up ok.  But all this talk of innovation creation is just talk. Saying how innovation will occur is hard. True education has a major roll in the creation of innovation but some places do it better then others. Silicon Valley does it better then the North West states home of the Ivy league schools. So it is not mearly having top universities? What is it then?

That is the million dollar question.