Offshoring


 * Background**:

For example, when China joined the WTO, they encouraged a large rise in offshoring because many companies moved factories there.

While China is making itself a better base for offshoring, other countries are trying to keep up. These include Malaysia, Brazil, Vietnam, and others. This creates "competitive flattening."


 * Major distinguishing characteristics:**

When an entire factory is moved to a different location, resulting in the same product being produced with cheaper labor, lower taxes, subsidized energy, and lower health-care costs.


 * Ultimate significance:**

The ultimate significance is that by using the concept of offshoring companies can reduce costs. The costs can be reduced because in other countries the wages are lower based on the fact that the cost of living is lower. One of the positives of offshoring is that it can lead to lower prices for US consumers. One of the negatives of employing this practice is that it takes away jobs from US citizens and gives those jobs to people overseas.