ABSTRACT
The news of Swissair, British Airways or TSB Lloyds Bank (UK) relocating a large part of their current and future information processing work to Bangalore, Mumbai or Manila contributes to the apprehension of a service sector disappearing from the European Union (EU) and surfacing in the emerging economies, particularly Asia. The emerging economies of Asia, such as Malaysia, India and the Philippines, are reportedly the major recipients of such subcontracted or outsourced jobs from the core industrially advanced countries of the EU. The level of wages in these countries is generally low, in some cases less than one-tenth of those prevailing in the industrially advanced EU countries (see Table 1.1). Despite persistent coverage in the press and in business journals, however, there has been little systematic analysis of the extent of this relocation, and of its implications for current and future trading patterns between the EU and the developing world. This paper aims to fill this gap in a modest and cautious way.
