Why Did Businesses Go Overseas for Their Jobs?
A contentious political debate, particularly in the United States, is about the practice of businesses moving overseas. The practice can include having the corporate headquarters in another country or outsourcing work and entire sections of a corporation to another country. The debate over this practice is contentious since many Americans feel that American jobs and tax revenue is lost from this practice. Proponents of this practice argue it helps corporations save money and helps with economic investments globally.
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New Markets
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Going overseas gives a corporation the chance to invest in new markets. For example, if a firm in another country would like to form a partnership, the corporation can save money by creating an overseas branch with that partner firm. Corporations can also utilize new capital investments to create facilities, such as production factories, in markets with a large population of unskilled labor.
Global Trade
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A business might consider going overseas because of low tariffs or taxes. Thanks in part to trade deals, incentives are created if a corporation in the United States, for example, incorporates itself in a country in Europe. This way, the corporation does not have the same corporate tax structure as it would if it is completely within the United States.
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Cheaper Investments
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A point that may anger many Americans is that a company moves overseas because resources and capital are usually cheaper. For example, the United States has labor laws covering such things as wages, benefits and union rights. In terms of workers, other countries do not provide as many legal protections to workers as does the U.S. That could mean that wages are low and benefits or union rights non-existent in some countries, making it financially advantageous for corportations to make their products in these countries.
The Human Cost or Advantage
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Although the economic benefits of outsourcing should be respected and may lead to higher corporate profits, immediate reaction to outsourcing is never viewed positively by American workers. The narrative many Americans say occurs is that workers who are hired in a corporation's overseas market are seldom paid or given the benefits of American workers. This means an American job is lost and a worker overseas is paid below that of an American worker. However, many corporations argue that in the global economy, it is to the advantage of their shareholders to invest in cheaper capital and labor.
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References
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