The strategy of diversification of foreign trade: Outsourcing

Proponents proper use of the classical theory to support mutually beneficial outsourcing admit that this strategy of diversification of the company as outsourcing for a number of economic agents in the importing country can have negative consequences: the theory of comparative advantage does not mean that international trade benefits obtainedall subjects, thereby refuting the notion that classical theory proposes unduly optimistic interpreted by the effects of outsourcing for the importing country.

Thus, the strategy of horizontal diversification, ie appeal to the services of an outside firm, as a rule, entails a reduction in the demand for labor, engaged in the provision of outsourced services in the country, which leads to an increase in unemployment in the importing country.It should be noted that such a diversification strategy that generates this negative consequence of outsourcing to the importing country, has received in the works of Amity and K. Lepid definition of "exporting jobs" is a criticism of the theory of mutually beneficial nature of international outsourcing as the most convincing and obvious argumentconfirmation of the hypothesis about the redistribution of the benefits of outsourcing mainly for the benefit of the exporting country.Particularly acute scientific discussion regarding the correctness of using this argument has gained in the US - the largest importer of outsourcing services in the world.

The dual nature of the impact of outsourcing on the national economy, involving a combination of the effect of the labor market and the business sector can be traced back to the model proposed by J. Bhagwati, Panagariya A. and T. Schrinivasanom.As a strategy of diversification in their work, outsourcing is a two-product model, in which the importing country is involved in international trade and technological innovations enable it to import the outsourcing services.Each of the two goods produced in the country is produced with the involvement of labor resources that can be replaced with the use of international outsourcing.The simulation results show that the importation of outsourcing services leads to the growth of the national income of the importing country.Calling the resulting increase in social benefits, the authors admit that it is accompanied by a receipt vedt to job cuts and the redistribution of income in favor of importing firms.

Indeed, this strategy creates a loss of diversification of the national economy of the USA, expressed in absolute terms the number of jobs each year as a result of reduced transmission services autsorsorsing abroad presents considerable.Thus, according to B. Messner in the US for this reason every year reduced 250 thousand jobs, and by 2015 the total number of job losses, according to the forecast George. McCarthy, should reach 3.3 million people.This strategy of diversification, according to opponents of the idea of ​​the profitability of outsourcing for the importing country does not consider their opponents negative macroeconomic consequences of getting individual companies benefit from outsourcing, that justify the need for protectionist measures to restrict the import of outsourcing services.

Supporters of outsourcing and, therefore, free trade, accused opponents just as limitations of the analysis, arguing that the defenders of protectionism deliberately narrow research focus and substitute the macroeconomic effects of the outsourcing effect solely on the labor market, the scale of which is also overpriced.