NCPA - National Center for Policy Analysis

BENEFITS FROM FREE TRADE FAR EXCEED ITS COSTS

June 29, 2004

While outsourcing does impose costs on those who lose their jobs, its benefits are real and impressive, says business magnate Steve Forbes:

  • Outsourcing cuts the cost for technology firms and other service providers by 60 percent.
  • By contracting out support services, U.S. companies use domestic workers in more productive jobs.
  • Every dollar spent on outsourcing creates about $1.13 of additional economic activity in the United States through spin-off effects.

The United States is also a key destination for international corporations looking to "insource" production and jobs, says Forbes:

  • Last year, 6.4 million Americans were employed by foreign companies' U.S. subsidiaries.
  • Numerous foreign carmakers, such as Toyota and Hyundai, have recently established plants in the United States.
  • Most of these foreign investments bring high-quality jobs, paying 19.1 percent more on average than U.S. companies.

Source: Steve Forbes, "Include Outsourcing When Considering Free-Trade Benefits," Investor's Business Daily, June 21, 2004.

 

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