Synopsis of a Case Study: Us/China Offshoring
BRIEF SYNOPSIS OF CASE STUDY ON OFFSHORING: BETWEEN CHINA AND THE UNITED STATES: IS IT BENEFICIAL FOR BOTH ECONOMIES? ZENY ASUNCION BUS 7010 Off-shoring in its simplest definition means tapping a resource outside of Home to take advantage of a cheaper resource to produce a product. It is a result of labor shortage of qualified employees where the economic condition prevents a company from meeting the demand.
The United States economy experienced a boom in off-shoring between the period of 1983 and 2002 when imports from low-income countries like China and Philippines doubled. Within the period, there was a sharp increase in income inequality, where jobs related to manufacturing were shipped overseas at the expense of domestic (U.S.) skilled workers to the tune of over 5 million jobs.
This paper will develop elements of the Ricardian Model with certain Hecksher-Ohlin influences since the case study setting involves two countries, two goods, and two factors of production. Based on these determinants, the paper will attempt to validate a statement whether or not offshoring between China and the United States will have an economic benefit under both countries, and if so, to what extent. In the process of validation, the paper will consider the theory of the Ricardian model under the following assumptions: • Two countries involved in the trading, China and the United States
•
Only two goods are produced, intellectual property (engineers and IT specialists) and finished products (electronic goods)
•
Labor is the only factor in the production
The research will utilize a set of source data based on economic information from both U.S. and China economy. Other data to consider would be the impact of US technical jobs being moved abroad, displaced US skilled workers, overall effect on wages for lost US manufacturing jobs, to include a survey on the current demographics of US workers affected by off-shoring.
Based on the results of my research, I would
The United States economy experienced a boom in off-shoring between the period of 1983 and 2002 when imports from low-income countries like China and Philippines doubled. Within the period, there was a sharp increase in income inequality, where jobs related to manufacturing were shipped overseas at the expense of domestic (U.S.) skilled workers to the tune of over 5 million jobs.
This paper will develop elements of the Ricardian Model with certain Hecksher-Ohlin influences since the case study setting involves two countries, two goods, and two factors of production. Based on these determinants, the paper will attempt to validate a statement whether or not offshoring between China and the United States will have an economic benefit under both countries, and if so, to what extent. In the process of validation, the paper will consider the theory of the Ricardian model under the following assumptions: • Two countries involved in the trading, China and the United States
•
Only two goods are produced, intellectual property (engineers and IT specialists) and finished products (electronic goods)
•
Labor is the only factor in the production
The research will utilize a set of source data based on economic information from both U.S. and China economy. Other data to consider would be the impact of US technical jobs being moved abroad, displaced US skilled workers, overall effect on wages for lost US manufacturing jobs, to include a survey on the current demographics of US workers affected by off-shoring.
Based on the results of my research, I would