1.2.8 In praise of cheap offshore labour? continued
There are two points which are central to this line of thinking. One, according to Wolf (2004), is that the whole process, as odd as it may sound, is about mutual exploitation. Outside firms do indeed exploit the poor by taking advantage of the profitable opportunities that a pool of cheap labour represents. But Indonesian or Chinese workers, for instance, could be said to exploit the incoming firms by extracting higher pay from them and taking advantage of opportunities that previously were unavailable to these workers. In this way, both sides stand to gain from the arrangement. And, leading directly on from this, this mutual exploitation is said to represent the price of an entry ticket into the global marketplace. Today's affluent Asian economies such as Hong Kong, Taiwan, South Korea and Singapore all started out this way, by exploiting their low-cost resource base, and, as we can see from Figure 9 , their growth rates since the 1960s over a 30-year period have been impressive. Compared with other less developed parts of the globe, export-led growth has been a huge boon to the workforce of these Asian countries.
Click to view a larger version of Figure 9 (map).
On the basis of this type of evidence, it is concluded by Wolf and others that what is needed for today's poor countries is more of the same: greater opportunities to exploit their low-cost resources, not fewer; more global exploitation, not less. After all, they point out, you would be hard pressed to find a sweatshop in Hong Kong or Singapore nowadays, precisely because they have moved onwards and upwards in a kind of virtuous circle of economic growth to better jobs, higher living standards and much improved working conditions. Indeed, some of the biggest companies moving work around the East Asia region in the present day are based in these countries, as well as Taiwan and South Korea. One of the largest, the Pou Chen Group, a Taiwanese-owned company, has factories in China, Indonesia and Vietnam. Other firms such as the Hong Kong-based Li & Fung or the Taiwanese-based Nien Hsing Textile Company, are at the centre of subcontracting networks which span much of East Asia, sourcing materials from one place, dyes from another, zips from somewhere else and assembling the outfits in yet another location (see Figure 10 ).
Click to view a larger version of Figure 10 (map).
By the 1990s, powerful companies like these, many of which started out as low-cost offshore manufacturers, were a small but significant part of a Taiwanese or a Hong Kong economy that had gone increasingly ‘high tech’, moving up the value chain by making the shift from cheap labour industries to better paid, more highly skilled work. More to the point, both Krugman (1997) and Wolf (2004) argue that the route out of poverty which these countries took is precisely the one that today's poorer countries, such as Bangladesh, Cambodia, Indonesia, Vietnam and parts of India and China, wish to follow. And, we are told, it is the exploitation of their abundant cheap labour which holds the key to that development process.