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Outsourcing as a Way to International Trade

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3. Is outsourcing just a new way of doing international trade or is outsourcing something to fear as fundamentally damaging to the U.S. economy?

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The debate of outsourcing started when President Bush's chief economic adviser, Gregory Mankiw stated that outsourcing jobs to other countries was "just a new way of doing international trade" and "a plus for the economy in the long run." The shifting of jobs to lower-wage countries is an increasingly popular practice in the U.S. by businesses seeking to cut operating costs and this issue has become too emotional because of its two dramatically different effects: it leads to layoffs and dislocations for many U.S. workers even if most economists say that it will ultimately strengthen the U.S. economy.

"Outsourcing" is also commonly called "offshoring" and both terms are used to describe the practice of American firms which contract workers or companies in other countries for the labor to produce a good or service, and/or by building capital through factories or research facilities for the purpose of lowering costs. It has been ...

Solution Summary

The solution discusses outsourcing as a new way of doing international trade or if it is something to fear as fundamentally damaging to the U.S. company. References included.