Computers And Globalization

1. Computers And Globalization Notice:This set of slides is based on the notes by Professor Guattery of Bucknell and by the textbook author Michael Quinn CSCI 240 Computers and Society

2. Globalization refers to the process of creating a worldwide network of businesses and markets. [Quinn 2013] It involves international investment. The work to develop, manufacture, sell, and support a product occurs across multiple countries. Globalization CSCI 240 Computers and Society

3. Globalization depends on computers and digital technology, especially high-speed, high capacity communications. Software and algorithmic techniques for logistics allows for the coordination of complicated supply and manufacturing operations. Fast communications and the ability to move large amounts of data allows managers to make quick decisions. The Nature of Globalization CSCI 240 Computers and Society

4. Globalization is primarily a business and commercial phenomenon. It is driven by efforts to find economic advantages and to profit from them. The Nature of Globalization (2) CSCI 240 Computers and Society

5. Globalization is primarily a business phenomenon, but it requires crossing international boundaries. That involves governments. The interests of government often agree with those of business. However, they can come into conflict in areas such as national security and employment policy. Barriers to Globalization CSCI 240 Computers and Society

6. In order to deal with problems between governments, a range of international agreements have been negotiated. In addition, international organizations such as World Trade Organization have been formed to deal with conflicts that arise that are subject to the international agreements. Barriers to Globalization (2) CSCI 240 Computers and Society

7. The World Trade Organization(WTO) is an international organization that helps develop international trade agreements and resolves trade disputes between nations. In addition, there are two older international financial institutions, the World Bank, which makes loans to developing nations, and the International Monetary Fund(IMF), which works to stabilize international financial systems. International Organizations https://www.imf.org/external/pubs/ft/exrp/differ/differ.htm CSCI 240 Computers and Society

8. The European Economic Union is an economic political union of the nations of Europe that regulates trade through a standardized system of laws. The North American Free Trade Agreement (NAFTA) is an agreement between the U.S., Canada, and Mexico that creates a joint trading partnership. Trade Treaties and Agreements CSCI 240 Computers and Society

9. Outsourcing means contracting a business function to someone else [Wikipedia]. Outsourcing may be, but does not have to be, done internationally. • Outsourcing has occurred in various industries: • Services • Software production • Engineering • Manufacturing Outsourcing CSCI 240 Computers and Society

10. Outsourcing in the telecommunications industry has been going on since at least the 1980s. Companies provided people to answer phones, take orders, or provide information for other companies that did not want to provide a phone center. In the last decade, many phone answering services in the U.S. have been outsourced to India. While it has cut costs for companies, it has also generated many consumer complaints. Outsourcing in Services CSCI 240 Computers and Society

11. Outsourcing in the software industry has increased greatly over the last decade. Advances in communications and meeting technologies and the existence of a large, technically trained population primarily in India has led many U.S. companies to move routine software development work abroad. Software engineering, architecture, and design activities have stayed in the U.S., but people are concerned that they could also move. Outsourcing in Software CSCI 240 Computers and Society

12. Outsourcing in engineering has followed a pattern similar to that in the software industry. U.S. immigration rules limit the number of technical workers who are admitted to the U.S. Engineering work is spread over the world. Communications technology supports work that now can continue throughout the 24-hour day. As workers in one regions end their work day, workers in a time zone eight hours earlier start theirs. Outsourcing in Engineering CSCI 240 Computers and Society

13. The outsourcing of manufacturing work has caused the greatest controversy in the U.S. The reason is that it affects the largest number of workers. Issues of national security are also part of the debate. Economic inequality in the U.S. is also a concern. Outsourcing in Manufacturing CSCI 240 Computers and Society

14. Originally work was outsourced for cheaper labor. However, Asia in particular has developed the infrastructure to allow large manufacturing complexes to change rapidly as changes in product design require new parts, materials, and processes. Logistics and supply chain issues play a key role now. Outsourcing in Manufacturing (2) CSCI 240 Computers and Society

15. Arguments for Globalization • Increases competition • People in poorer countries deserve jobs, too • It is a tried-and-true route for a poor country to become prosperous • Global jobs reduce unrest and increase stability CSCI 240 Computers and Society

16. Arguments against Globalization • Makes the United States subordinate to the World Trade Organization • Forces American workers to compete with foreigners who do not get decent wages and benefits • Accelerates exodus of manufacturing and white-collar jobs from United States • Hurts workers in foreign countries CSCI 240 Computers and Society

17. Foreign Workers in the IT Industry • Visas allow foreigners to work inside U.S. • H1-B • Right to work up in United States to six years • Company must show no qualified Americans available • Congress still authorizes 65,000 H1-B visas per year, plus 20,000 more for foreigners with advanced degrees • Quota not filled in 2009 due to economic downturn • L-1 • Allows a company to transfer an internal worker from an overseas facility to the United States • Workers do not need to be paid the prevailing wage • In 2006 about 50,000 foreigners in U.S. under L-1 visa CSCI 240 Computers and Society

18. Foreign Competition • China is world’s number one producer of computer hardware • IT outsourcing to India is growing rapidly • Number of college students in China increasing rapidly • ACM Collegiate Programming Contest provides evidence of global competition • First contest in 1977, mostly US and Canadian colleges • In 2011, more than 8,000 teams from 88 countries participated • Last U.S. team placed first was Harvey Mudd in 1997 • From 2007 to 2013 all winning teams were from China, Russia, or Poland CSCI 240 Computers and Society

19. Some Internet Statistics • http://www.internetworldstats.com/ • America : http://www.internetworldstats.com/stats2.htm • Europe: http://www.internetworldstats.com/stats4.htm • Asia: http://www.internetworldstats.com/stats3.htm CSCI 240 Computers and Society

20. To explore the ideas about globalization, we take a look at Apple and Foxconn as a case study. A series of articles are available on Moodle from the New York Times that reasons that Apple moved production to China, and that documented the problems in plants manufacturing Apple products. A Case Study CSCI 240 Computers and Society

21. For many years Steve Jobs was proud to claim that Apple products were made in the U.S. In 1984 he said that the Macintosh computer was “a machine that is made in America.” The NeXT machine was made in the U.S. as well, and even in 2002 the later versions of the Macintosh were made in California. Apple and Outsourcing CSCI 240 Computers and Society

22. However, by 2004 Apple began to move its manufacturing operations outside the U.S. Apple was not doing well then financially, and it made the move to cut costs. According to an Apple executive, Timothy D. Cook, Apple’s CEO, believed there were two main reasons for moving production to Asia: Apple and Outsourcing (2) CSCI 240 Computers and Society

23. Companies in Asia “can scale up and down faster” than companies elsewhere. • “Asian supply chains have surpassed what’s in the U.S.” • Example: Glass Screens for iPhone Reasons for Moving to Asia CSCI 240 Computers and Society

24. The scale of the workforce needed to produce the iPhone and iPad make it difficult to build in the U.S. The number of industrial engineers needed to oversee production is more than the U.S. workforce could support. Even though production costs are a small part of the iPhone’s cost, the labor market issues remain a problem. Other Benefits of Manufacturing in China CSCI 240 Computers and Society

25. For commodity products, low labor costs are important in assuring market, profitability (or minimal losses). • as of 2013, world market shares: Android 78%, iOS 18% (domestically, Android 52%, iOS 41% • See, e.g., • http://www.digitaltrends.com/mobile/android-and-apple-marketshare-versus-profit/ • http://gadgets.ndtv.com/mobiles/news/android-holds-781-percent-global-smartphone-share-in-q4-ios-176-percent-idc-482885 • http://thenextweb.com/mobile/2014/04/04/comscore-apple-takes-41-3-share-top-us-smartphone-maker-samsung-hits-27-android-outgains-ios/ Other Benefits of Manufacturing in China (2) CSCI 240 Computers and Society

26. The cost of manufacturing an iPhone is a small part of its price. Apple makes a large margin on its products (the margin is the difference between the cost of the product (design, manufacture, marketing, and sales) and its price). If the workers aren’t making this money, who is? Apple shareholders and executives. Where Does the Money Go? CSCI 240 Computers and Society

27. Environmental and Conservation Issues • The manufacture, use, and disposal of electronic devices has significant environmental impacts: • manufacture requires the use of rare earth metals • manufacture involves the use of toxic compounds • use of electronic devices consumes substantial electric power CSCI 240 Computers and Society

28. While there are efforts to recycle electronic devices, there are still a number of problems with the disposal of such devices: • Not all devices can be recycled. CRT monitors and TVs are becoming hard to recycle, and unrecycled CRT devices are a severe pollution problem. • Recycling can release toxic chemicals into the environment • Recycling is often done in third-world countries where environmental standards are lax Environmental and Conservation Issues (2) CSCI 240 Computers and Society

29. China: e-waste land? • Let’s watch and discuss a CNN video (and its accompanying article) dated May 30, 2013. • http://www.cnn.com/2013/05/30/world/asia/china-electronic-waste-e-waste/ CSCI 240 Computers and Society