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Advantages and Disadvantages of Relocating Overseas

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Advantages and Disadvantages of Relocating Overseas

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  • November 2008
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INTRODUCTION

Businesses in the United States have developed a new business model predicated on finding and using the most rewarding benefits provided by developing countries. They have found that where better-trained workers are performing the same task at a lower overhead than their US counterparts, and with spiraling benefits costs the trend toward relocating companies overseas. Reports from Congress have found that relocating has had a negligible impact on the integrity of U.S. economy. There is no doubt though, that U.S. firms are increasingly looking at lower-wage countries to build their workforce. The Bureau of Labor Statistics does not yet keep data on the number of jobs transferred out of the country, and companies have kept their data hidden on this issue. Little is known about the number of jobs that have left the U.S. to other countries and in addition, their affect on the economy.

The economy has seen many affects because of globalization and the relocating of jobs. Historically, the U.S. has had a manufacturing influenced economy and then a focus on service related jobs. However, globalization has allowed companies to find new regions where the same work is done with less costs. This encourages firms to outsource the low-skill jobs to overseas markets. Company executives believe they will save money by substituting high-skill, low-cost foreign labor for American workers. The economical liberalization of China, India, and the former Soviet Union satellite nations has added billions of new skilled workers. But the more important factor, one that is overlooked by most observers, is the fate of U.S. workers no longer plays a role in corporate decision-making. If there is no cost to destroying U.S. jobs, then companies will seek to lessen their labor costs, spurring transfer of high-skill, high-wage jobs. Company execu¬tives are acting rationally, trying to increase profits for their companies, and we pass no nor¬mative judgment...

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