the economy of the flat world

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Oct 24, 2013 (3 years and 9 months ago)

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the economy of the flat world


case study: SINGAPORE


by wan melvin, hwa chong institution

the flat world

introduction

premium on education

Industry sectors

rich
-
poor gap

technology usage
-
communications

offshoring and
outsourcing: India

conclusion



I n 1942, Christ opher Columbus set sail for India, going


west. He never did find I ndia, but he called t he people

he met ''Indians'' and came home and report ed t o his king and queen: ''The
world is round.'' Thomas L. Friedman set off for India 512 years lat er, going east. He had Luft hansa
business class, and he came home and report ed only t o his wife and only in a whisper: ''The world is flat.''

Thomas L. Friedman, aut hor of best
-
selling book “The World Is Flat: A Brief History of t he Twenty
-
first
Cent ury”, has concept ualized globalizat ion as a process in which individuals and companies are
empowered, t hus “flattening” the world. The aut hor analyzes t he how accelerat ed change is brought
about by int ersect ing technological advances and social prot ocols.

I n his trip t o Bangalore for a document ary, Thomas realized a global economic shift over the past few
years. As I T has developed, companies in I ndia are now ready t o prepare his t axes in Bangalore, read his
X
-
ray from Bangalore, t race his lost baggage from Bangalore, and even writ e his new software in
Bangalore. This, t ermed out sourcing, is just one dimension of the economic evolution.

I n t he bubble era, hundreds of millions have been invested in technology, and t he global arena has
been made smaller. Remote development is now possible, by chopping up any piece of work, and
sending one part of it t o Bangalore, one t o Beijing, and anot her t o Boston.

With this, we see that the world playing field is being leveled


every part of t he world t hat can connect
t o t he Net can compet e equally for global knowledge work with the superpowers such as USA. Leveling
t he world playing field will nonetheless cause, THE FLAT WORLD.

How has the global landscape been evolving

economically?

This is t he main question that hopefully can

be answered t hrough t he following statistics based in Singapore.

Aft er t he t wo industrial revolutions, the world has experienced major event s such as the SARS
out break, Avian Flu out break, t he I raq War, and t errorist attacks such as the 911 at t ack on
World Trade Cent re.
As we focus on these crises breaking out at such a rapid pace, have
we taken a step back to look at the economic world?

Thomas L. Friedman, Foreign Affairs
columnist for The New York Times, has inspired us with his art icle: “
The World Is Flat
”.

Prof Hoon Hian Teck, Associat e Professor t eaching Economics at Singapore Management
Universit y, has his own idea of the ‘
3rd Industrial Revolution



t hat of a informat ion revolution.
I nformat ion Technology ( IT), has become part of our daily life. It has increased efficiency
t remendously, but economics have also realized it s impact on the world. In spatial
geography, t he global space concept has been significant ly reduced by I T.

Now t hat we have ent ered t he 21st century, what does the world economy have in store for
us? How will the economy continue to change, if we study its evolution for the past few
years?
With the ‘3rd Industrial Revolution’, IT has diminished international spaces, but what
does this mean for our economy?

Let us find out through the following statistics.z

The bar graph provided here
shows the Median Gross Monthly
Income of Full
-
Time Employed
people by their Highest
Qualification Attained and sex.
The figures are in SGD, and the
survey was conducted in June
2004. We can see the relation
between education and wages


the higher paying salaries are
given to people with higher
education degrees. This is also
known as ‘education premium
wage’.

This line graph shows the number of jobs held in each industry in Singapore over
the years 1994 to 2004. The orange line distinctly shows a significant increase in
the number of jobs in the Service industry. On the other hand, the manufacturing
industry has been on

a decline, while the

three other industries

are rather stable.

This phenomenon

may be linked to the

“flattening of the

world”, and the IT
-

revolution.

The line graph (left) shows the
average monthly income of 5
household income groups, in both
1998 and 2003. The graph tells us that
the rich are becoming richer, while
the poor, poorer. Below, we see

the percentage changes of each
household group.


Summary of statistical conclusions:

(i) Higher education levels will br ing you to higher paying jobs.

(ii) Ser vice industr y is r ising, while manufactur ing is declining.

(iii) The r ich ar e becoming r icher, and the poor, poor er.

(iv) Space has been r educed thr ough IT (communications).

(v) Offshor ing and outsour cing of ser vices and talents, especially in IT, ar e r ising economic factor s.


We can see that the statistics all support the hypothesis that a more information
-
based
industry has been formed. Education is thus necessary in higher
-
paying jobs (i). With the
advancement of IT, space is diminished through transport and communications (iv), and any
manufacturing or construction job can be ‘chopped up’ and sent to different places. As
human beings cannot be replaced by IT, the service industry tends to be rising (ii). People
available to more IT tools through money, tend to get richer, while those who cannot, get
poorer (iii). This increases the rich
-
poor gap. More talents are hence outsourced for IT
developments to boost the economy (v).


In conclusion, these statistics from Singapore support the hypothesis of the world becoming
‘flatter’, and the economy being more information
-
based.

The

bar

graph

shows

the

usage

of

different

communication

services

from

2002

to

2005
.

Telephone

lines

and

dial
-
up

connections

have

dropped,

with

the

increase

in

mobile

subscribers,

and

perhaps

Broadband

wireless

networks

(no

data

available)
.

We

can

say

that

space

has

been

reduced,

as

we

are

no

longer

needed

to

stay

at

a

fixed

place

to

make

a

phone

call,

or

connect

to

the

Internet
.

The pie chart shows the different
industries that have outsourced their
jobs since 1990 to 2003. We can see
that the largest industry sector
contributing to outsourcing is
Information Technology, followed by
Human Resource.

The bar graph then shows us India’s
increase in price for exporting its
software and services. This implies a
growth in India’s economy, while IT
and HR continues to take a more
prominent part in outsourcing.

(
%
)

Space has been reduced
through IT (communications)

Higher education levels will
bring higher paying jobs

Service industry is rising;
manufacturing declining

Offshoring & outsourcing of services & talents,
especially in IT, are rising economic factors

The rich are becoming richer,
and the poor, poorer

Bibliography


Singapore Government: Ministry of Manpower (2006),
Ministry of Manpower
[On
-
Line]

Available:
http://www.mom.gov.sg/

(16 March 2006)


Singapore Department of Statistics (2006),
Statistics Singapore


Keystats Content Page

[On
-
Line]

Available:
http://www.singstat.gov.sg/keystats/keystats.html

(16 March 2006)



Introduction:


http://www.thomaslfriedman.com/worldisflat.htm


http://www.nytimes.com/2005/04/03/magazine/03DOMINANCE.html?ex=1270267200&en=cc2a00c4d9325374&ei=5088&partner=rssnyt


http://en.wikipedia.org/wiki/The_World_Is_Flat#How_the_World_Became_Flat


Education:


http://www.mom.gov.sg/NR/rdonlyres/64406C8E
-
289B
-
444C
-
98FF
-
A343275407C4/2234/2004LF_t15.pdf


Industry sectors:


http://www.mom.gov.sg/NR/rdonlyres/64406C8E
-
289B
-
444C
-
98FF
-
A343275407C4/2238/2004LF_t19.pdf



Rich
-
poor gap:


http://www.singstat.gov.sg/keystats/hes/chapter2.pdf


Telecommunications/IT:


http://www.singstat.gov.sg/keystats/mqstats/ess/aesa131.pdf


India outsource/offshore:


Cyber Futuristics India Pte Ltd. (2004),
Outsourcing Statistics

[On
-
Line] Available:
http://www.cyfuture.com/outsourcing
-
statistics.htm

(16 March
2006)


Gary Endelman, NASSCOM (2006),
NASSCOM


Fall Guy: U.S. Immigration and the Myth of Offshoring
[On
-
Line]

Available:
http://www.nasscom.org/artdisplay.asp?Art_id=2047

(16 March 2006) Prof Hoon Hian Teck, Associate Professor of Economics,
Singapore Management University


Pictures from:


http://www.moneygram.com/servlet/DefaultApplyXSL?xslURL=/Display/temgweb.xsl&URL=/Document/p2__CompanyInformation.xml


http://jameshudnall.com/blog.php?/weblog/C47/


http://www.rtnda.org/sow/index.shtml


http://www.robert
-
fisk.com/iraqwarvictims_page20.htm


http://www.section508.gov/docs/JulieShaw_files/TextOnly/Slide1.html


http://www.thisintothat.com/gallery/sculpture.html#

*All websites were last visited on 16 March 2006.