Outsourcing : three long run predictions

We argue that exporting jobs – outsourcing is a market-based mechanism that has the potential to distribute wealth and raise the standards of living around the globe. International trade theories dictate that countries will attain mutual gains when they export those goods for which their relative costs of production are comparatively lower. A low wage environment is the Ricardian ‘comparative advantage’ of developing countries. We predict that • the labour supply of a developing country will become less elastic in the long run as a new worker, who demands social protection, emerges. • world labour markets will become as efficient as the present world capital markets since qualified labour has become a mobile factor of production. • outsourcing will bring political reforms to the existent international organisations, which should add to their agendas, the tutelage of the welfare gains indirectly brought by outsourcing.