This is an election year in the United States, and the offshore outsourcing of jobs is proving politically contentious. Its most vociferous opponents contend that corporations betray their employees by shipping work overseas. Yet research shows that, on the whole, the economies of developed countries benefit from this phenomenon.1 So do those of developing countries, where new jobs alleviate poverty, improve general living standards, and provide the means to address health and environmental challenges.
In reality, the process of global economic integration—of which offshore outsourcing is a highly visible component—diffuses the best business ideas and management tools, intensifies competition, and sparks innovation. It thereby leads to lower prices and higher wages as well as bigger profits that companies can reinvest in new business opportunities.
Of course, the fact that economic integration benefits the global economy as a whole doesn't mean that it benefits all workers and companies. On the contrary, offshoring can destroy the jobs of workers in developed economies, and incumbent companies in developing ones can lose out to more efficient foreign competitors during the transition to modern production methods. Those hardest hit can face major dislocations and a loss of status.
But understandable as the protectionist reaction...