I know this one will light some fires...
In general I agree with you Acro, there is however one point at which I have to agree with your friend. that point concerns "Dual Use" technologies. On a couple of occasions in the last few years I have seen posts and replies that were concerning technologies that just aren't needed for mundane run of the mill applications. There was one that concerned very high speed ball screws that also had to withstand high g loading and be very light weight and small. this sounded an awful lot like a control surface actuator for a high speed rocket or aircraft. The fact that the poster appeared to be in either India or Pakistan made all kinds of alarm bells go off in my head. And I told him so. Alas, I cannot find the specific post in question or I'd post a link to it for an example of what I mean. Perhaps others will remember the post for me.
On the whole, I do not believe that engineering degrees in other parts of the world are quite up to snuff compared to those here in the US or in Europe. I also believe there are quite a few people in the developing world that hold down jobs as engineers but do not have the education or experience to qualify as one, judging by some of posts I've seen on occasion. If these are the people to whom our jobs are being given, simply because they work cheap, I'm not too worried, the pendulum will eventually swing the other way. Employers relying on thier work will find that quality is as important, if not more so, in the engineering side of the business as it is in the manufacturing side.