Globalisation and Offshoring
I) Introduction
Globalisation is bringing the world economies toward a system where goods, services, capital and ideas are free to move without boundaries. Many salutes this trend as beneficial for the global economies while others perceive it like a threat to their own welfare. Especially the theme of off-shoring, which cause the replacement of many works to less development countries, is developing a debate on whether free trade should be limited in order to preserve domestic labour. This report aims to show how the fears over off-shoring jobs are generally overestimated. First an overview on how globalisation is developing will be provided. Then the report briefly analyses the reasons why companies approach off-shoring. Finally the effects o off-shoring for the domestic and foreign economy are analyzed.
II) Globalisation and Free-Trade
According to Worthington and Britton (2006) globalisation is the process of integration on a worldwide scale of markets and production. The world is moving away from a structure of national market divided by barriers, distance and cultures. Evidences of this shifting to a completely free trade market can be seen in the last decades history.
Starting from the 1950’s the world economy has faced an important increase of the international trade. According to Bottini, Erns and Lubecker (2005), the fall of transportation costs has pushed the trade in finished goods and the different countries have specialized in the production of those goods in which they have comparative advantage.
However the changes that took places in the last years, which include the lowering of trade and investment barriers, along with radical technological improvements in transportation and communication, have accelerated the globalization processes.
Nowadays the word economy is facing a new phase of the free trade, where components and intermediate goods can be transferred quickly from a country to another, information system permit to reduce
Globalisation is bringing the world economies toward a system where goods, services, capital and ideas are free to move without boundaries. Many salutes this trend as beneficial for the global economies while others perceive it like a threat to their own welfare. Especially the theme of off-shoring, which cause the replacement of many works to less development countries, is developing a debate on whether free trade should be limited in order to preserve domestic labour. This report aims to show how the fears over off-shoring jobs are generally overestimated. First an overview on how globalisation is developing will be provided. Then the report briefly analyses the reasons why companies approach off-shoring. Finally the effects o off-shoring for the domestic and foreign economy are analyzed.
II) Globalisation and Free-Trade
According to Worthington and Britton (2006) globalisation is the process of integration on a worldwide scale of markets and production. The world is moving away from a structure of national market divided by barriers, distance and cultures. Evidences of this shifting to a completely free trade market can be seen in the last decades history.
Starting from the 1950’s the world economy has faced an important increase of the international trade. According to Bottini, Erns and Lubecker (2005), the fall of transportation costs has pushed the trade in finished goods and the different countries have specialized in the production of those goods in which they have comparative advantage.
However the changes that took places in the last years, which include the lowering of trade and investment barriers, along with radical technological improvements in transportation and communication, have accelerated the globalization processes.
Nowadays the word economy is facing a new phase of the free trade, where components and intermediate goods can be transferred quickly from a country to another, information system permit to reduce