more on Now, a course on outsourcing: MIT shows the way]

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Wed, 03 Mar 2004 17:37:15 -0800
From: Jamus Jerome Lim <jamus () internationaleconomics net>
Subject: RE: [IP] more on ] Now, a course on outsourcing: MIT shows the way]
To: dave () farber net, 'Ip' <ip () v2 listbox com>

Hi Dave,

> PLEASE!  Stop confusing "outsourcing"-- which has been a common and
> generally-accepted/acceptable business practice, probably since the
> beginning of "business" ...  with "OFFSHORING"!

For the record, the international trade literature generally defines
"outsourcing" broadly in terms of: The use of intermediate factors of
production from an external foreign country for a domestically-produced
product. For example, the use of Taiwan-produced semiconductors and
Singapore-produced HDDs in a Dell computer assembled in Austin, Texas.
More narrowly, the definition involves the use of intermediate factors
for the production for domestically-produced products that are
*subsequently exported*.

The relocation of jobs from a domestic plant to a foreign plant
("offshoring")would be turn up in statistics as simply international
trade in goods (since the goods produced in a foreign country arrive
back at home in the form of imports). There is also a distinction
between a U.S. firm deciding to build a plant in a foreign country -
this is just foreign direct investment, or FDI.

----
Jamus Jerome Lim
jamus () internationaleconomics net
Web: http://www.internationaleconomics.net

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