Diversification strategy for foreign trade: outsourcing

Supporters of the idea of the correctness of using the classical theory to justify the mutually beneficial nature of outsourcing recognize that such a diversification strategy for an enterprise as outsourcing can have negative consequences for a number of economic entities of the importing country: the theory of comparative advantages does not mean that all subjects benefit from international trade, Thereby refuting the view that classical theory offers overly optimistic interpreted consequences of outsourcing for the country they are Orter.

Thus, the strategy of horizontal diversification, that is, access to the services of an external firm, usually entails a decrease in the demand for labor resources involved in outsourcing services, within the country, which leads to an increase in unemployment in the importing country. It should be noted that such a strategy of diversification that generates this negative consequence of outsourcing for the importing country, which was defined in the works of M. Emity and K. Lapid as "exporting jobs", is criticized by the theory of the mutually beneficial nature of international outsourcing as the most convincing and obvious argument in Confirmation of the hypothesis of the redistribution of benefits from outsourcing primarily in favor of the exporting country. The scientific debate on the correctness of the use of this argument has acquired a special urgency in the United States, the largest importer of outsourcing services in the world.

The dual nature of the impact of outsourcing on the national economy, suggesting a combination of effect for the labor market and for the business sector, can be traced on the model proposed by J. Bhagwati, A. Panagariya and T. Shrininasan. 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 outsourcing services. Each of the two goods produced in the country is produced using labor resources that can be replaced using the international outsourcing mechanism. The modeling results confirm that importing outsourcing services leads to an increase in the national income of the importing country. Calling this gain the public benefit, the authors acknowledge that its receipt is accompanied by a reduction in jobs and a redistribution of income in favor of importing firms.

Indeed, such a strategy of diversification creates losses in the national economy of the United States, expressed in absolute terms of the number of jobs that are annually cut due to outsourcing services outsourcing, appear significant. Thus, according to V. Messner, in the United States, for this reason, 250,000 jobs are cut annually, and by 2015 the total number of job cuts, according to the forecast of J. McCarthy, should be 3.3 million people. This strategy of diversification, in the opinion of opponents of the idea of outsourcing benefits for the importing country, neglected by their opponents the negative macroeconomic consequences of the outsourcing benefits of certain companies, which justify the need for protectionist measures to restrict the import of outsourcing services.

Supporters of the same outsourcing and, therefore, free trade accuse opponents of the limited nature of the analysis, arguing that advocates of protectionist measures deliberately narrow the research focus and substitute the macroeconomic effects of outsourcing exclusively on the labor market, the scale of which is also overvalued.