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Offshoring relies heavily on the mobility of labor and capital; land has little or no mobility potential. In microeconomics , working capital funds the initial costs of offshoring. If the state heavily regulates how a corporation can spend its working capital, it will not be able to offshore its operations.
For decades, pundits have argued about the values and dangers of offshoring. Recently, economist Alan S. Blinder weighed in with a paper examining the potential ramifications of the process. Dr ...
Most scholars have argued that offshoring is primarily driven by opportunities to reduce labor costs and by labor arbitrage effects. [5] While the ORN surveys confirm the importance of costs, they also reveal that companies use offshoring as a means to access talent pools outside their home countries, in particular for higher-skilled work.
Global labor arbitrage is an economic phenomenon where, as a result of the removal of or disintegration of barriers to international trade, jobs move to nations where labor and the cost of doing business (such as environmental regulations) are inexpensive and/or impoverished labor moves to nations with higher paying jobs. [1]
China just got 1.3 percent of the price paid for an iPhone, and that offshoring made it possible to move U.S. labor to the more value-added parts of the supply chain.
Offshore outsourcing – combines outsourcing and offshoring; is the practice of hiring an external organization that is in another country to perform a business function. [ 142 ] In-housing – hiring employees [ 217 ] [ 218 ] or using existing employees/resources to undo an outsourcing.
In joint work with Gordon Hanson, they have discussed the employment and wage effects of offshoring, especially on workers with low skills. [13] The research output is summarized in the book Offshoring in the Global Economy: Theory and Evidence, which was initially presented as the Ohlin Lectures, Stockholm School of Economics, 2008. [14]
While the US remains home to some of the world’s largest drug companies, much of the industry’s manufacturing has moved offshore, partly in order to take advantage of lower labor costs.