The delocalization debate: is trade a source of job creation, destruction, or both?

Résumé du document

I'll start with a quick definition of relocation and outsourcing, because they are the several aspects of “the delocalization debate” : We talk about outsourcing and relocation when a firm keeps its headquarters in its country of origin but gives the production to subsidiary companies or to subcontracting factories generally located in developing countries with cheaper labor force (meaning lower production costs).

Usually, we use the amount of the FDI to measure the importance of relocation's. FDI it designate an investment by a foreign investor in an company (a factory, a mine, a land etc.) in another country, in order to make profits. From 1990 to 2005, the number of Foreign Direct Investment has been multiplied by 6. The increase of relocations and outsourcing are the direct proof of international trade and international exchanges.

According to developed countries, globalization and relocation threaten employment, while production goes to cheaper countries. So it becomes an important stake. Actually it is the fact of the 65 000 multinationals in the world, and if we include all the subsidiaries companies, they are 700 000. And the 200 first ones produce ¼ of the global production.

Extraits

[...] And we have to say firstly that relocations concerns usually non-skilled jobs in developed countries, and the employment created after, thanks to the benefit, concerns jobs that need more qualifications. So in a way, there is compensation from quantity to quality. That changes the structure of employment in the country of origin. Also, relocations of one sector (industry for example, in the secondary sector) can have repercussions on services (that is to say the tertiary sector). With the mechanism of purchasing power of consumers, that I've explain before. It means jobs destruction in a sector, but creation in another. [...]

[...] The companies that relocate are also seeking fiscal advantages or maybe they try to get closer of an expanding market. In the country that receive the FDI : the business climate has to be stable and solid, with for instance, a minimum of existing protection for the workers, as well as, a good political climate. Many people are not learned is developing countries and many outsourced jobs required non-skilled people. The delocalization, a source of jobs destruction I'll start with some data : In 2009, the French economy has destroyed around jobs, especially in the sector of industry. [...]

[...] Besides, the openness to international trade is in favor of the strongest companies. That means, the weakest ones would disappear because the could not cope with the international competitiveness. The delocalization creates jobs But relocations are also a source of jobs creations. Of course, jobs are created in the country that receive the FDI or where the factory is created. But also in the developed countries. For example, it has led to create an average of jobs per year, in France from 2000 to 2005 according to the INSEE. [...]

[...] But indirectly, it stimulates the national and global economy. On the first hand, benefits engendered by the lower costs, means the development of market shares for the company. It is also possible to create new industries or business sectors. Also, the company would be able to invest in research and innovation. On the other hand, it means an increase in purchasing power for the consumers. The domestic and foreign demand would rise, stimulating the production and employment, in a virtuous circle. [...]

[...] The delocalization debate: is trade a source of job creation, destruction, or both? Introduction I'll start with a quick definition of relocation and outsourcing, because they are the several aspects of delocalization debate” : We talk about outsourcing and relocation when a firm keeps its headquarters in its country of origin but gives the production to subsidiary companies or to subcontracting factories generally located in developing countries with cheaper labor force (meaning lower production costs). Usually, we use the amount of the FDI to measure the importance of relocations. [...]