Offshoring Country Essay
What is the impact of offshoring on employment (in the offshoring country)? Use empirical evidence to support your answer.
The development of globalisation of recent years has seen the ever increasing frequency and extent of offshoring by Multi National Enterprises (MNEs), involving the contracting out of different stages of production that were previously performed within a production unit to foreign subcontractors (Foster 2012). Reductions in the cost of international trade created and outpouring of low skill, labour-intensive manufacturing to developing countries. Factors such as the removal of trade barriers, reduction transport costs, and advances communication technology have made it possible to divide production into component …show more content…
The literature surveyed all recognizes the shift in demand, towards high skilled labour, in the onshore country, changing the overall composition of the workforce. The effect on over levels of employment however is negligible, with potentially a small increase. This contravenes the view that offshoring simply exports jobs out of from the onshore country. The degree to which technological changes have evolved the composition of the work force has played just as a significant role as the process of offshoring itself, and is perhaps the reason why some studies a produced contradicting results. Overall, I found that a statement by Hijzen and Swaim (2007) perhaps best summarieses the issue: ‘the productivity gains from offshoring are sufficiently large that the jobs created by higher sales completely offset the jobs lost by relocating certain production stages to foreign production …show more content…
(2010) Offshoring in the Global Economy: Microrconomic Structure and Macroeconomic Implications. Cambridge: MIT Press
Foster, N. (2012) ‘Offshoring and Labour Markets’, 3rd FIE special – International Economics
Source: http://www.fiw.ac.at/fileadmin/Documents/Publikationen/Spezial/3. FIW- Special_Offshoring%20and%20Labour%20Markets_final.pdf [28/4/13]
Greenway, D. Gorg, H., and Kneller, R. (2008) ‘Offshoring and the UK Economy’. GEP, Leverhulme Centre for Research on Globalisation and Economic Policy.
Source: http://www.nottingham.ac.uk/gep/documents/reports/gep-offshoring-report-06-08.pdf [28/4/13]
Hijzen, A., and Swaim , P. (2007) ‘Does Offshoring Reduce Industry Employment?’ GEP, Leverhulme Centre for Research on Globalisation and Economic Policy. Paper No. 2007/24
Hijzen, A., Holger, G., and Hine, R. (2005) ‘International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom’, The Economic Journal, Vol. 115, No. 506, pp. 860-878
MacMillan, M., and Harrison, A. (2009) ‘Offshoring Jobs? Multinationals and US Manufacturing Employment’ Tufts University, Department of Economic, Working paper
OECD (2007), OECD Employment Outlook, Chapter 3, OECD:
The development of globalisation of recent years has seen the ever increasing frequency and extent of offshoring by Multi National Enterprises (MNEs), involving the contracting out of different stages of production that were previously performed within a production unit to foreign subcontractors (Foster 2012). Reductions in the cost of international trade created and outpouring of low skill, labour-intensive manufacturing to developing countries. Factors such as the removal of trade barriers, reduction transport costs, and advances communication technology have made it possible to divide production into component …show more content…
The literature surveyed all recognizes the shift in demand, towards high skilled labour, in the onshore country, changing the overall composition of the workforce. The effect on over levels of employment however is negligible, with potentially a small increase. This contravenes the view that offshoring simply exports jobs out of from the onshore country. The degree to which technological changes have evolved the composition of the work force has played just as a significant role as the process of offshoring itself, and is perhaps the reason why some studies a produced contradicting results. Overall, I found that a statement by Hijzen and Swaim (2007) perhaps best summarieses the issue: ‘the productivity gains from offshoring are sufficiently large that the jobs created by higher sales completely offset the jobs lost by relocating certain production stages to foreign production …show more content…
(2010) Offshoring in the Global Economy: Microrconomic Structure and Macroeconomic Implications. Cambridge: MIT Press
Foster, N. (2012) ‘Offshoring and Labour Markets’, 3rd FIE special – International Economics
Source: http://www.fiw.ac.at/fileadmin/Documents/Publikationen/Spezial/3. FIW- Special_Offshoring%20and%20Labour%20Markets_final.pdf [28/4/13]
Greenway, D. Gorg, H., and Kneller, R. (2008) ‘Offshoring and the UK Economy’. GEP, Leverhulme Centre for Research on Globalisation and Economic Policy.
Source: http://www.nottingham.ac.uk/gep/documents/reports/gep-offshoring-report-06-08.pdf [28/4/13]
Hijzen, A., and Swaim , P. (2007) ‘Does Offshoring Reduce Industry Employment?’ GEP, Leverhulme Centre for Research on Globalisation and Economic Policy. Paper No. 2007/24
Hijzen, A., Holger, G., and Hine, R. (2005) ‘International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom’, The Economic Journal, Vol. 115, No. 506, pp. 860-878
MacMillan, M., and Harrison, A. (2009) ‘Offshoring Jobs? Multinationals and US Manufacturing Employment’ Tufts University, Department of Economic, Working paper
OECD (2007), OECD Employment Outlook, Chapter 3, OECD: