Journal Topic 9: The Myth of Outsourcing's Effect

In economy, globalization refers to increasing economic interdependence of and national economies across the world through a rapid increase in cross-border movement of goods, service, technology, and capital. When countries have comparative advantage, which refers to the ability to produce a particular good or service at a lower opportunity cost, other countries buy the goods and service from those countries. This leads to outsourcing. People often argue about the practice outsourcing. Some companies believe that by outsourcing, it can create cheap labor. They let those countries that have comparative advantages to create the materials and other goods in order to save time and energy. With cheap labors, the companies won’t lose that much money by giving high salaries. In addition, the production and efficiency will most likely increase. However, others believe this will destroy middle class jobs. Actually, experts found out that outsource companies has a faster growing employment rate than those that do not. Moreover, it creates twice as many jobs in the home countries. Even though there were 391 millions jobs that were lost because of outsourcing, it actually created 411 million jobs. Those who lost their original jobs even found better jobs. Therefore, outsourcing can be a great opportunities for the countries.