The delocalization debate: is trade a source of job creation, destruction, or both?
- What are the main reasons for outsourcing jobs ?
- The delocalization, a source of jobs destruction
- The delocalization creates jobs
- A compensation effect ?
I'll start with a quick definition of relocation and outsourcing, because they are the several aspects of ?the delocalization debate? : We talk about outsourcing and relocation when a firm keeps its headquarters in its country of origin but gives the production to subsidiary companies or to subcontracting factories generally located in developing countries with cheaper labor force (meaning lower production costs).
Usually, we use the amount of the FDI to measure the importance of relocation's. FDI it designate an investment by a foreign investor in an company (a factory, a mine, a land etc.) in another country, in order to make profits. From 1990 to 2005, the number of Foreign Direct Investment has been multiplied by 6. The increase of relocations and outsourcing are the direct proof of international trade and international exchanges.
According to developed countries, globalization and relocation threaten employment, while production goes to cheaper countries. So it becomes an important stake. Actually it is the fact of the 65 000 multinationals in the world, and if we include all the subsidiaries companies, they are 700 000. And the 200 first ones produce ¼ of the global production.