No Left Turns links us to an article that discusses a study commissioned in California on the economic impact of exporting jobs offshore. The counter-intuitive conclusions are that offshoring not only is good for the economy but it also creates more jobs than it costs. An excerpt:
How can offshoring preserve jobs? Consider the case of a company that's increasingly beset by foreign competition and can no longer turn a profit. Its choice might be to close down - taking all its jobs with it - or farm out some of its tasks to overseas workers, thus preserving the remaining positions.
"By sacrificing a small proportion of the jobs offered by the company, the other jobs remain," the paper said.
That's not all. The researchers also suggest that offshoring can even create new American jobs.
Companies looking to invest money in expansion base their decision on the projected rate of return. If, by offshoring some jobs those companies can earn a higher return, they are more likely to go ahead with the investment, which then will create more jobs at home.
That's not just economic theory. The numbers in the real world support this view. Between 1991 and 2001, wrote Haveman and Shatz, U.S. firms that expanded their employment abroad also increased their domestic employment by 5.5 million workers. Their share of overall U.S. employment also increased during this period.
This is interesting, but whether it's true or not I have no way to judge. Read the whole article and decide for yourself.
