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This document summarizes the key points from a movie analysis on outsourcing:
1) The movie illustrates the economic theory of comparative advantage, where countries specialize in what they can produce at a lower cost and trade with each other for mutual benefit.
2) The factor that moves from the source (US) to host (India) country is labor, as call centers are outsourced.
3) In the short-term, the source country (US) may face increased unemployment and decreased quantity of labor, while the host country (India) experiences increased wages and quantity of labor as winners. Owners of outsourcing companies also benefit.
This document summarizes the key points from a movie analysis on outsourcing:
1) The movie illustrates the economic theory of comparative advantage, where countries specialize in what they can produce at a lower cost and trade with each other for mutual benefit.
2) The factor that moves from the source (US) to host (India) country is labor, as call centers are outsourced.
3) In the short-term, the source country (US) may face increased unemployment and decreased quantity of labor, while the host country (India) experiences increased wages and quantity of labor as winners. Owners of outsourcing companies also benefit.
This document summarizes the key points from a movie analysis on outsourcing:
1) The movie illustrates the economic theory of comparative advantage, where countries specialize in what they can produce at a lower cost and trade with each other for mutual benefit.
2) The factor that moves from the source (US) to host (India) country is labor, as call centers are outsourced.
3) In the short-term, the source country (US) may face increased unemployment and decreased quantity of labor, while the host country (India) experiences increased wages and quantity of labor as winners. Owners of outsourcing companies also benefit.
Zoila Castillo CBM600 Castillo-CBM 600|page 2 Describe which international economic theory is behind the theme of the movie outsourced? (two lines, 1 point) The law of comparative advantage provides a logical explanation of international trade which is essentially the idea of two countries, that are etter at different things enefit fro! focusing on their strength and "trading# with each other$ 1. Please identify the factor(s) which moves from source country to host country? (one line, 2 points) %aor, is the factor that !oves fro! source country to host country$ 2. Please identify the winners and losers in this movie. elect the appropriate model and develop the welfare analysis to !ustify your claim$ (a page, 10 points) To deter!ine the winners and looser is not easy, since there are & perspectives the source and the host country$ 'n the case of the !ovie outsourced 'ndia is a winner, ecause the wages and the (uantity of laor increase$ And the looser in this case will e the )nited *tates+ there is decrease in the (uantity of laor, due to !oving the call centers to 'ndia$ But we can,t deny that the owners of the co!panies are the pri!e winners in outsourcing and !igration laor situation$ Efects of Migration Labor in India and the US
Castillo-CBM 600|page 3 3. "hy does the host country participate in this #ame? (one line, 2 points) -ost country participated in this ga!e ecause rings !ore .os and the wages rises$ 'ndia produces more goods using fewer resources. 4. $dentify opportunities and threats the company faced in the host country.(5 points) Threats/ econo!ical0political instaility and possile co!!unication prole!s$ Benefits/ increase in productivity and inco!e, due to cheaper wages in the host country$ 5. "hat would you predict for the future of the source country in the short%term? (two lines, 5 points) 'n the short run the une!ploy!ent rate will increase in the source country$ At the sa!e ti!e buyers receie consumer surplus and t!e sellers ac"uire producer surplus. 6. $llustrate at least two (2) positive conse&uences and at least two (2) ne#ative conse&uences attached to #lobal business trade. (5 points) Castillo-CBM 600|page # Positive Consequences: a1 'ncrease welfare for all trading partners 1 'ncrease in productivity at a lower cost c1 creates international co!petition which then !a2es goods and services cheaper d1 Consu!ers can have greater access to a wider variety of goods Negative Consequences: a1 %oss of .os 1 3educed wages c1 'ncrease in foreign det d1 'nternational trade can also result in destruction and exhaustion of natural resources$ 7. "hat are the policies a source country can employ to minimi'e outsourcin#? (one line, 5 points) *o!e of the policies are trade arriers such as/ (uotas, tariffs, susidies, e!argo, and currency devaluation$