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Outsourcing Creates U.S. Jobs
Daily Policy Digest

Trade Issues / Benefits of Trade

Monday, March 15, 2004
The latest U.S. government data suggest that foreigners outsource far more office work to the United States than American companies send abroad, reports the Wall Street Journal.

Services provided by jobs outsourced from the United States to developing nations are counted as imports, whereas services performed by Americans for foreign firms are counted as exports. Using such government categories:

  • The value of imported services -- which includes U.S. outsourcing of call centers and data entry to developing nations, among other things -- hit $77.38 billion for the year, up $7.94 billion from 2002.
  • The value of U.S. exports of legal work, computer programming, telecommunications, banking, engineering, management consulting and other private services jumped to $131.01 billion in 2003, up $8.42 billion from the previous year, the Commerce Department reported Friday.
  • Thus the U.S. posted a $53.64 billion surplus last year in trade in private services with the rest of the world.
In addition to hiring more U.S. businesses to provide services, last year foreigners doubled the amount of money invested in U.S. companies, plants, offices, stores and other facilities. That foreign direct investment more than doubled -- from $39.63 billion in 2002 to $81.98 billion in 2003, the government said.

Congressional efforts to restrict outsourcing by U.S. companies may backfire, say economists, if they provoke retaliation by U.S. trading partners. Also, U.S. service exporters -- insurers, for instance -- might lose some competitive edge if they can't use foreign suppliers for call centers or other back-office operations.

Source: Michael M. Phillips, "More Work Is Outsourced to U.S. Than Away From It, Data Show," Wall Street Journal, March 15, 2004; News Release, "U.S. International Trade in Goods and Services," March 10, 2004, Bureau of Economic Analysis, Economics and Statistics Division, U.S. Department of Commerce.

For WSJ (requires subscription)
http://online.wsj.com/article/0,,SB107919804320754591,00.html

For more on Benefits of Trade
http://www.ncpa.org/iss/tra/

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