"Open doors to India," British PM David Cameron

In July 2010, India was one of the first international destination  recently elected British Prime Minister David Cameron chose to visist. The British PM came to India with a simple agenda; greater access to the Indian market for British companies for this would lead to job creation back home in the UK.

When interviewed by Sky News in India, David Cameron stated,

“One of the things we want to see is an opening up of banking and insurance and retail industry that are relatively still protected which would benefit British business. Open doors in India so our businesses can invest.”

The interview demonstrated exactly why Britain and other Western economies should not fear outsourcing, should not perceive outsourcing as the loss of jobs and most importantly should not implement protectionist policies against outsourcing. In the merry go round that is globalization, businesses and trade get uprooted and moved to where economic activity is most financially viable. Inevitably outsourcing is thus a part of globalization and should be accepted as a part of globalization. In turn globalization brings with it fresh opportunity, revenue and job creation. This is precisely why the British PM seeks greater economic cooperation with India and greater access to the Indian market. The more liberalized the Indian market is the more British countries can invest in India and in turn expand and create more jobs back in the UK.

The British PM statement also served and poignant reminder as to the fact that protectionism will inevitably be met with protectionism. Although, the Indian market has been significantly liberalized since the early 1990’s, the West is still keen to witness more access to the Indian market. The likelihood of this being achieved was the British government to implement protectionist policies against outsourcing are highly unlikely. Rather the converse would be true, protectionism against outsourcing would result the implementation of India’s own protectionist measures. With the mass potential the Indian market now presents the West, undoubtedly protectionisms against outsourcing would not be in the best interests of the British economy.

Advocates of protectionism against outsourcing or those who criticise the practise of outsourcing must take into consideration the entire dynamics of globalization before petitioning for a curb on outsourcing. True, outsourcing results in a “temporal” displacement of job loss, but the increased level of economic activity via the removal of trade barriers creates that many more jobs in the West. The West should focus on greater access to the Indian market as opposed to a curb on outsourcing. It is access to India’s 350 million strong middle class that will contribute economic gains and job creation back home. Protectionist measures against outsourcing serve only as a fallacy; giving the impression that jobs are saved. In truth a greater number of jobs that would have been created through investment and exportation never metalize.