Outsourcing Economics

Abstract

Outsourcing Economics has a double meaning. First, it is a book about the economics of outsourcing. Second, it examines the way that economists have understood globalization as a pure market phenomenon, and as a result have 'outsourced' the explanation of world economic forces to other disciplines. Markets are embedded in a set of institutions - labor, government, corporate, civil society, and household - that mold the power asymmetries that influence the distribution of the gains from globalization. In this book, William Milberg and Deborah Winkler propose an institutional theory of trade and development starting with the growth of global value chains - international networks of production that have restructured the global economy and its governance over the past twenty-five years. They find that offshoring leads to greater economic insecurity in industrialized countries that lack institutions supporting workers. They also find that offshoring allows firms to reduce domestic investment and focus on finance and short-run stock movements.

Threats to the International Trade Regime: Economic and Legal Challenges Arising from Anti-Offshoring Measures Across the Globe

“…272 Cross-country comparisons and country-specific studies have demonstrated that pro-business policies such as labor market flexibility and investment, coupled with labor support initiatives involving worker retraining and mobility, are an optimal solution. 273 Based on this body of research, the resulting economic insecurity arising from job displacement is mitigated when the presence of the following factors come into play: regulations promoting firm flexibility in hiring and firing (less restrictive employment protection legislation), training and retraining programs, and unemployment benefits. 274 Affirming such findings are country-specific examples, such as Denmark, that demonstrate that labor market flexibility and labor support programs are effective strategies to offset offshoring's negative distributional effects.…”

Historical evolution of global inequality in carbon emissions and footprints versus redistributive scenarios

“…Second, while international inequality in incomes has declined, inequality within countries has increased, certainly in richer countries (Alvaredo et al, 2018). This is often explained by regressive domestic economic policies and weakening of social safety nets combined with globalization, whereby global value chains put downward pressure on less-skilled workers' 20/26 wages (or increase unemployment outright) in rich countries through competition with developing countries, while the incomes of managers at company headquarters grow faster (Aguiar de Medeiros and Trebat, 2017;Milberg and Winkler, 2013;Wood, 1995). And despite rhetoric to the contrary, the current US administration's policies have supported an entrenchment of these trends (Mayer and Phillips, 2019).…”

Multinational Corporations and the Globalization of Monopoly Capital: From the 1960s to the Present

“…36 Economists William Milberg and Deborah Winkler view the profusion of such subcontracting practices as a "shift in corporate strategy," which involves the pursuit of production strategies through which corporations can increase profits by reducing costs and raising flexibility. 37 Sociologist Gary Gereffi and his colleagues developed the concept of "buyer-driven" commodity chains to emphasize the booming offshore subcontracting by "merchandiser" multinationals that no longer (or never did) manufacture their products, but merely design and market them. 38 While these views can help explain what is happening on the surface, a radical or Marxian perspective is needed to understand the imperialism that underlies this shift in corporate strategy.…”