Economist Daniel Drezner on the Facts About Outsourcing

Filed in archive Intelligence on October 7, 2004

Source: csmonitor.com

Every where you look lately, there's another article or news alert about American companies outsourcing. Often, the story paints a picture of a troubled economy that is unable to recover from the mounting job losses to overseas workers.

However, economist Daniel Drezner is skeptical. Could all of these reports flooding into the papers be politically driven? Are there any facts and figures to back up these horrible stories about outsourcing?

This was the topoc of Drezner's recent OP-ED piece in the New York times.

Among his findings:

Now, however, we can add some actual figures to the overheated debate. The Government Accountability Office has issued its first review of the data, and one undeniable conclusion to be drawn from it is that outsourcing is not quite the job-destroying tsunami it's been made out to be. Of the 1.5 million jobs lost last year in "mass layoffs'' - that is, when 50 or more workers are let go at once - less than 1 percent were attributed to overseas relocation; that was a decline from the previous year. In 2002, only about 4 percent of the money directly invested by American companies overseas went to the developing countries that are most likely to account for outsourced jobs - and most of that money was concentrated in manufacturing.