Indonesia's Human Development Strategies

1. What is meant by the globalization of human capital? Is this inevitable as firms increase their global operations?

Outsourcing emerged on the financial arena during the 1980s and has since then been spreading. Outsourcing production was furthered with the process of globalization which provided a new component leading to the strengthening of resources, skill and labor specializations across the world. The process of outsourcing is using the skill and abilities of a third-party to accommodate society on the foundation of labor. As stated earlier, it was during the 1980s that the process kicked off mainly due to the efforts of corporations when they began to hire labor forces across the world. Even though outsourcing has come out from its developing stages, there are still following effects on the US economy.

The book Out of Site by Erik Loomis discusses many problems when it comes to American companies outsourcing their factory jobs. One of the issues that he discusses are the horrible working conditions that plague foreign countries. These awful working conditions used to be normal in the United States in the early 19th century but laws soon changed that. Now these working conditions have just changed their location and continue to take people’s lives every year.

Thomas L. Friedman portrays, in “Globalization: The Challenge to America”, the American attitude, “Oh well, we’ll fix that problem when we get to it. After all, we’re just competing against ourselves.” As time progressed, this attitude only perpetuated into becoming more and more complacent, making America unable to take initiative and change outdated ways of thinking. Shirley Jackson expresses that “If left unchecked, this [quiet crisis] could challenge our preeminence and capacity to innovate.” America’s “quiet crisis” is the lack of STEM graduates such as engineers and other scientists needed to satisfy today’s work force. More problems America faces in the international competition are the ambition, numbers, and education gap that only seems to be getting bigger. Over the years of overcompensation, Americans have become significantly lazier, especially in comparison to those of a developing country. America is also not producing enough engineers to have the people to fill American jobs that could be outsourced to a more, qualified foreigner. America, after World War II, was established as a big power, through innovation and control. Now, America’s reputation has diminished as it appears that America is interdependent on these developing countries like India or China, who develops 70% of merchandise sold by Wal-Mart. Although, these developing countries are the ones producing and manufacturing the products designed and created by American businesses and corporations, these countries are trying to make the switch from being “made in” but also “designed

Globalization is taking its toll on the American work force. “In the 1980’s, globalization hurt blue-collar America,” (Steven Greenhouse, 2008) this was due to the vast amount of imported steel, autos, machinery, and electronics. It is now the twenty-first century. Globalization is not only affecting blue-collar workers, but has extended its reach to white-collar workers. Jobs are being lost in America as corporations move production, and/or outsource jobs to low-wage producing countries. It is estimated over 7.9 million jobs have been lost this year, and some of these jobs will never return. This is corporation’s philosophy on how to cut cost, which in-turn translates into a larger profit margin. Because of these extensive job losses, the

Outsourcing, or the practice of Corporations expanding their influence, and labor force to foreign countries needs to stop. As it causes the decline of developed nations labor forces, does nothing to fix inequality in underdeveloped nations, has adverse affects on the economies of developed nations, and outsourcing allows corporations to cause extensive harm the the world, and it’s enviornment. If the practice of globalization were ended, it would improve the lives of many people in developed nations, the policies that affect them, and ultimately the world.

Outsourcing does not typically expand in the United States; this is because of high wages and the struggle of keeping a job. Therefor, when a company outsources it hands over jobs in foreign countries. The United States career opportunities were diminished by 2.9 million while the jobs boosted by 2.4 million overseas. With those numbers, that means big name companies are only hiring 20 percent of Americans. (americanprogress.org). If all jobs are being shipped away, what is left here? This only enables other countries room for improvement.

Second, both author discuss what is the effect in the changes of job because of outsoucing. According to Friedman, some jobs are lost to the outsource (some to China, some to India), he said “Not only does my work have to fit into somebody’s global supply chain, but i myself have to understand how I need to compete and have skills sets required to work at pace that fits the supply chain and I had better be able to do that as well or better than anyone else in this world”. Hudson Analysts show that 20% of U.S manufacturing workers now have jobs that depend on exports. So the workers will not only compete with their counterparts across town or in other parts of the U.S, but also with workers around the globe. Then Employment growth, meanwhile, will remain concentrated in services, which also will benefit increasingly from export markets and will offer high salaries for skilled workers. And For those who maintain and improve their skills, the changes should bring increasing rewards, but it will be traumatic for those who fall behind the skills curve and resist retraining.

Many argue outsourcing takes jobs away from the American people, which would be true in high skill situations, but if they are low skill jobs that Americans do not want to work regardless, then that argument is rendered invalid. If America were to outsource their low skilled jobs, the jobs would get done, likely at lower costs to the developed country, and at higher benefit to the developing country being outsourced to. Authors of “Immigration Versus Outsourcing; A Developing Country’s View”, Simontini Das, Ajitava Raychaudhuri, and Saikat Sinha Roy, concur that for the developing country, outsourcing is in fact more beneficial. They claim that the establishing trade deals via outsourcing between countries will aid in the development of the country as a whole, while keeping workers at home. Das, Ajitava, and Saikat conclude that if the outsourcing market were to expand, the need for workers to migrate would be substantially lessened, all the while filling jobs and improving the

Australia is unlikely to fight against newly appearing and developing countries in the production of a low-cost and large manufacturing, especially with our neighbours. In fact, as we are constantly reminded, Australia is a high wage, high skilled country and could be more successful if changes regulations are needed to meet the demand that this brings. The reality is that the increasing cost of doing business in Australia is beginning to affect this area, with loyalty promises to major projects being tested. (Chris Pash, June 5 2014, 11:28am)

Although these new technology, more like companies, enter a new land looking for cheaper work force, it stills gives the country a huge boost in the demand for low level skilled workers. In the article “In what way has globalization affected unemployment?” Marsida T. Najdeni said that “What used to be done by low skilled workers in the U.S., it is probably getting done in sweatshops across Asia. Nonetheless, these sweat shops are all these Asian workers from the other side of the world have to survive. The famous Cambodian sweatshops to us might be unimaginable, but to the people living there is the only way of making their daily bread.” meaning that the gain of these countries mean losses to some already developed countries, like the US for

The process of globalization has numerous significant effects on countries, organizations, and individuals. These effects can be observed in the quality of products, in their prices, but also in their availability. Because of globalization, numerous companies prefer to expand their business on international level. Some of them outsource some of their processes and activities to cheaper destinations that allow them to reduce their investments.

Indonesia is the sixteenth largest economy, the largest economy in the South-east Asian economic region with the world's fourth largest population (263 million in 2017). It is an emerging economy that has increased its international integration, trade liberalisation and diverted from policies of import substitution towards export-led development. Indonesia is a member of the Group of 20 (G20) major economies and has been an active founding member of the World Trade Organisation (WTO). The impact of globalisation has benefited Indonesia as quality of life indicators and economic developments have improved but it also presents the challenge of improving regulations, building more competitive industries, increasing investment into education and infrastructure to remain competitive. Consequently, Indonesia has introduced numerous strategies to promote economic growth and development.

Outsourcing manufacturing jobs overseas has the additional benefit of promoting capitalism and free enterprise in many countries that have been run by communism and totalitarianism governments. Many political scientists and economists believe that by increasing economic interdependence with the United States, these foreign nations are more likely to develop into robust democracies and more likely to establish a middle class of their own this fact can be used by corporations such as Nike to justify outsourcing to these countries. [4]

In comparison with the number in developed countries, €9 per hour in the UK for example, no wonder why big multinational companies all over the world have been trying to outsource to Vietnam. There are many factories along the country which are manufacturing final products for world top multinational companies. Nike, Adidas, Panasonic, Toyota, etc., all place their factories in Vietnam. In fact, when one goes shopping in Europe, it is no surprised to see a product of a famous brand with the “Made in Vietnam” label printed on it . Moreover, according to some latest research, Vietnam has a young population. It can lead to a more effective working force, compared to countries which have an old population, such as Finland and Japan. In the last decades, the literacy rate of Vietnam has been increasing steadily, from 88% in 1989, 90% in 1999 to 93,5% in 2009. More people get a bachelor’s degree nowadays, which leads to the improvement in the worker’s skill. Offering not only a strong flow but an efficient working force, Vietnam has been attracting more investors every year.