Offshoring Innovation

The talk of offshoring jobs brings out the economic doomsayers.
“..angry, disillusioned developers are talking about everything from political activism to organized labor in the hopes of stemming the tide of lost jobs.”
DevX.Com 1 October 2003
“States Try to Stop U.S. Firms from Sending Hi-Tech Work Overseas”
Washington Post 31 January 2004
“Maybe offshoring is good for the economy in the long run. Maybe it will boost productivity and save companies. But it's causing real pain to real people. And they never thought it would happen to them.”
FastCompany April 2004
What's missing in all of this talk is some basic understanding of global economics and a familiarity of history beyond just the last decade. Leading research (Oxford Economic Papers, Vol 13 October 1961) has proven that there exists long-term patterns of positive international trade which are heavily influenced by innovation. These patterns are reinforced by the subsequent diffusion of that innovation to the world markets. A country that produces technologically superior goods will typically sell it first to their domestic market, then to other technologically advanced countries. In time, developing countries will import and later “manufacturer” these goods, by which time the original innovator will (should) have gone on to the next great idea.
The key point is the recognition that developing countries will eventually take over the manufacturing once the innovation has achieved some level of maturity. History has proven this out with:
– Steel
– Electronic device (VCR, DVD, TV, etc.) manufacturing
– Semiconductor manufacturing
What we are seeing now is the reality that writing software has reached a level of maturity where developing countries (India, China, Eastern Europe) can take over the “manufacturing”.
Why are we surprised?
Rather than focus on the inevitable transfer of mature innovations; individuals, companies and countries need to focus on pushing forward creating the next great idea. Some nations, such as the US and Japan, have historically held a competitive trade advantage because of their ability to innovate. This lead is not a given. Recognizing the escalating acceleration of innovation and the speed of change occurring in many industries, one could predict that the transfer of “mature” innovations will happen at an ever increasing pace. Which in turn will place increasing pressure to innovate the next great idea.
When will the treadmill stop?
It won't – get used to it.