Products are sent to countries that have comparative advantage on producing that product. The entire process is called as the globalization. The process of outsourcing is when companies find countries that has the comparative advantage and move their production line to there. For example, China has a comparative advantage on labor, so many companies move their production line there. Because they want to lower the cost. An open economy is when trade is not interrupted or intervened by government forces. People could actually do what they could do regardless of the government.
In outsourcing, people lost their job because people that are 1000 miles replace them. However, it could also lower the cost of companies that could use the money saved to enhance production and efficiency. Many labors in China don’t receive proper education while people in US receive proper production. Those money could be implemented in to research and development. According to some research, Chinese labor received less than one US dollar per hour. At the same time, US‘ minimum wage per hour in many states is 7.25$. Companies move their production line to China could lower their cost tremendously. The opportunity cost of using the production line in US exceeds the opportunity cost of using the production line in China. The level of US and China and labor is a big difference. It is better to let the outsourcing happen. Companies could use outsourcing to reach the maximum benefit.
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