Is outsourcing of production good or bad for an economy?
Outsourcing has become a topic in the current Presidential campaign. In answering this question please explain how it helps or harms an economy.
NAFTA is the worse thing to happen to this Country in my lifetime. You send jobs to Mexico and China and take away American people's living. Plus they don't play fair. A tariff is 0 for china to export goods here. For us to import goods to china the tariffs are hundreds of dollars. China has become a major Financial powerhouse simply because of NAFTA. PLUS CHINA DOESN'T HAVE ANYTHING LIKE OSHA. Their pollution to this earth is not regulated at all.
I would have to say it depends. It actually depends on a lot of things (much more than I know or am willing to get into) but I will say that outsourcing is good if each country is outsourcing what they are poor at producing to countries that are better at it, and vice versa. In other words, if the USA outsources certain production to China, then China needs to outsource other things to us, such as technology jobs or whatever, for there to be a balance. At this point, I don't think that's occurring.
I don't think one can say that outsourcing pf production is either all good or all bad. There are trade offs involved and it can be mutually beneficial for countries to partake in it. Hopefully the future will bring more balanced outsourcing.
Based on basic economics and comparative advantage, outsourcing isn't necessarily harmful to economies. If one country can produce certain goods at a cheaper cost than another, then they should produce those goods. Free trade benefits both countries involved or it wouldn't occur. As for China, they provide us with cheap goods at far lower prices then we could ever achieve producing those goods here. The money saved from purchasing these at lower costs opens up opportunity for more capital to be used in efficient ways. To produce the things that China exports to us would require a step back in quality of jobs within America, when a reallocation of freed up capital can easily create newer, better jobs.
Outsourcing of manufacturing that subjects to the economics of the job,in global competition offering product at reasonable price and quality,then it is necessary to cut input cost and making it cost effective to sustain in the market .So someone loses job,suppliers lose contracts and that harms economy
Outsourcing is getting transferred to developing countries from high cost economies in the west, developing nations keep their infrastructure and labor cost low and plus no tax regimes helps.Nobody knows how long outsourcing will continue?
outsourcing is the game, one gains ,one loses.
If you export your jobs, your manufacturing plant, and your heavy industry like steel making, then if there is a war situation you simply do not have the factories, the skilled experienced workforce, and the transport and training infrastructure to produce the materials you need. Imagine WW2 if at the time of Pearl Harbour most of the USA's productive capacity had been in Japan China and India!
The crux of the issue is the competitive environment (or lack thereof) produced.
Very often other countries receive tax breaks on imports and have no tariff added that causes their cost of production to get close to that of a domestic manufacturer. This makes it impossible for US companies to compete and we see the result with areas like Gary Indiana losing an entire economy to inexpensive Overseas steel.
If we require our businesses to comply with expensive safety measures, health insurance, minimum wages, EPA regulations, etc. then we must increase the price of any imported good to offset for a third world country's lack of those same controls. Otherwise we give incentive for jobs to leave. This is a huge part of the current problem and both sides have been involved in allowing it.
Sadly, this is not a democratic or republican problem; it is a personal problem for the millions of people who have had their jobs leave.
I read through all the answers and i think all have their share in explaining individual benefits or shortcomings of outsourcing production.
Let me try a more general approach: Outsourcing is nothing else but the attempt of a producing economic entity to become more competitive. This can be a company who tries to concentrate on core competences - thus outsourcing the cleaning of building windows or mowing the lawn to external service companies. It can also be the desire of an entire economy and its policy to take advantage of low cost countries (as happens with the US).
But here things get complicated. If an economy outsources more of its producing industry than the technological progress allows, then this will lead to importing products more than exporting. You may ask: so what? But the idea is that you can only trade storable products, goods, you can´t trade services. At the end this creates trade imbalances and current account distortions.
Whatever we think of the world economic situation, most problems and hickups can be traced back to these imbalances.
Ousourcing is like medication that is beneficial in small and well applied portions. Like any drug, if you overdose, it will hurt you.
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