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Abstract

This structured assignment is to accompany the case ''204-112-1''. The abstract of the case is as follows: Offshoring had become a contentious issue during the American Presidential elections. The roots of the controversy sprang from the disparaging growth of jobs in the US despite economic recovery. Proponents of offshoring derived their arguments from the theory of comparative advantage. They believed that it was in America''s best interest to take advantage of low cost, skilled labour in countries like India. Studies showed that the net benefit of offshoring was greater to the US and that it helped create, rather than destroy jobs in the parent country. Research also pointed out that the major cause of anaemic job growth was the productivity gains by American companies and that newer and better paying jobs would soon be created, albeit with some short run friction. Detractors, however, believed that export of service jobs, or offshoring, was the major reason for job losses. They rejected the application of the theory of comparative advantage, as its assumptions of the immobility of labour and capital were not being satisfied in the case of outsourcing. The case highlights the arguments and issues of offshoring.
Location:
Other setting(s):
2004

About

Abstract

This structured assignment is to accompany the case ''204-112-1''. The abstract of the case is as follows: Offshoring had become a contentious issue during the American Presidential elections. The roots of the controversy sprang from the disparaging growth of jobs in the US despite economic recovery. Proponents of offshoring derived their arguments from the theory of comparative advantage. They believed that it was in America''s best interest to take advantage of low cost, skilled labour in countries like India. Studies showed that the net benefit of offshoring was greater to the US and that it helped create, rather than destroy jobs in the parent country. Research also pointed out that the major cause of anaemic job growth was the productivity gains by American companies and that newer and better paying jobs would soon be created, albeit with some short run friction. Detractors, however, believed that export of service jobs, or offshoring, was the major reason for job losses. They rejected the application of the theory of comparative advantage, as its assumptions of the immobility of labour and capital were not being satisfied in the case of outsourcing. The case highlights the arguments and issues of offshoring.

Settings

Location:
Other setting(s):
2004

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