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Offshoring

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Offshoring is the relocation by a company of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Offshoring can be seen in the context of either production offshoring or services offshoring.

The economic logic is to reduce costs, sometimes called labor arbitrage, to improve corporate profitability. Jobs are added in the destination country providing the goods or services (generally a lower-cost labor country), but are subtracted in the higher-cost labor country. The increased safety net costs of the unemployed may be absorbed by the government (taxpayers) in the high-cost country or by the company doing the offshoring.[1]

Controversy

Notwithstanding the claims of neo-liberal economists, the empirical results of offshoring as opposed to the theoretical results are:[2][3][4][5][6][7][8][9][10][11][12][13]

  1. Declining US GDP
  2. Declining US tax base with increasing municipal, state and federal budget deficits
  3. Declining US consumer income and subsequent market decline
  4. Stagnation of US wages
  5. Declining career opportunities and upward mobility
  6. Worsening income distribution with a declining working and middle class
  7. Increasing trade deficits
  8. Loss of innovation
  9. Depreciation of the US dollar, a potential US national security issue
  10. Increasing safety net costs furthering federal and state budget deficits
  11. Increasing technology transfer to developing countries

Articles and resources

Related SourceWatch articles

Outsourcing

References

  1. http://en.wikipedia.org/wiki/Offshoring
  2. Josh Bivens, "Truth and consequences of offshoring", Economic Policy Institute, August 1, 2005
  3. Paul Craig Roberts, "A Nobel Economist Says Globalism Is Costly For Americans", OpEdNews, September 31, 2011.
  4. Dr. Alan S. Blinder, "How Many U.S. Jobs Might Be Offshorable?, CEPS working paper no. 142 (PDF)", Princeton University, March 2007.
  5. Paul Craig Roberts, "America R.I.P.", Institute for Political Economy, October 16, 2012.
  6. Statistical Abstract of the United States "Table 1308. U.S. Exports and General Imports by Selected SITC Commodity Groups: 2000 to 2010 (PDF)", US Census Bureau, 2012.
  7. Paul Craig Roberts, "When Truth Is Suppressed Countries Die ", Institute for Political Economy, March 14, 2013.
  8. Richard A. McCormack, "MIT: America's Manufacturing Sector Has Lost The Ability To Turn Innovative Products Into Volume Production", Manufacturing & Technology News, March 5, 2013.
  9. "Committee on Science and Technology U.S. House of Representatives, Full Committee Hearing - The Globalization of R&D and Innovation", June 12, 2007
  10. "Prof. Alan S. Blinder Testimony to the Committee on Science and Technology, U.S. House of Representatives (PDF)", June 12, 2007
  11. "Ralph E. Gomory Testimony to the Committee on Science and Technology, U.S. House of Representatives (PDF)", June 12, 2007
  12. "Committee on Science and Technology U.S. House of Representatives, Subcommittee on Investigation and Oversight Hearing - American Decline or Renewal? - Globalizing Jobs and Technology", May 22, 2008
  13. "Ralph E. Gomory Testimony to the Committee on Science and Technology - Subcommittee on Investigations and Oversight, U.S. House of Representatives (PDF)", May 22, 2008

External resources

External articles