Nagging Doubts About the Benefits of Globalization, and a Look at the Evidence

The phenomenon of "outsourcing" still fans the flames of much heated debate in both Europe and North America. At once praised and vilified, it has crept into all levels of discourse and political rhetoric. Some economists, led by Nobel laureate Paul Samuelson, have argued that by facilitating business and technological growth abroad, outsourcing companies may be sowing the seeds of decline at home. When the outsourced-to country "improves productivity in the rich country's export goods, trade can turn entirely to the poorer country's advantage." Though Samuelson's thesis seems theoretically plausible, the weight of empirical evidence, as detailed in a recent study by three US-based Indian professors. The study suggests that outsourcing will not bear such grave implications for richer countries, reassuring many economists that outsourcing will not seriously undermine the economies of Western Europe and the US. - YaleGlobal