From: Gerald_A_Levy@MSN.COM
Date: Sat Nov 13 2004 - 18:29:40 EST
----- Original Message ----- From: "Jurriaan Bendien" <andromeda246@hetnet.nl> Sent: Saturday, November 13, 2004 6:17 PM Subject: Outsourcing What I should have mentioned perhaps in my comments on outsourcing is that Epstein and others at the Political Economy Research Institute at Amherst, Massachusetts actually investigated this topic more closely - in terms of the substitution of imported manufacturing inputs for locally produced inputs. See http://www.umass.edu/peri/pdfs/WP89.pdf This however does not prove any genuine "transfer" of jobs from the US to other countries. After all, it may be that investors or management opt to buy manufacturing inputs overseas, at a more competitive price, from overseas plants that already exist, or perhaps that they buy up these overseas plants. If outsourcing is taken to mean that "foreign workers are taking our jobs away" this would imply that a plant is closed down in one country, and re-established in another country employing foreign workers (this is of course more easy to do in services, than in manufacturing - I already commented on the notion of "stealing jobs"). But I suspect really that much more often it is the case that management or investors just decide to buy cheaper foreign inputs, or alternatively start new plants overseas in preference to establishing them at home. In that case, additional investment does not occur at home, or, local plants are closed, because of competition from cheaper foreign products. Even so, if you look at data on capital committed to foreign direct investment in recent years, you find that it is tapering off, and that portfolio investment in foreign countries is quantitatively far more significant. The interesting thing about the globalization discourse is that everybody loves it, if it opens up more opportunities, but when they find they're outdone in the competition, it no longer seems such a great idea, and they stop talking about it so enthusiastically. Jurriaan
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