Economic Interactions and Flows

Offshoring is a form of outsouring when a company is operating overseas but the element of the company is within itself. This gives the company a chance to exploit laborers and sources at lower cost than from their homeland. So usually, companies in rich countries are implementing offshoring in poor or developing countries.  According to the article I read, as much as more than 75% of major financial institutions operate overseas now and UK has saved 1.5bn pound a year by offshoring in China and India. However, the surprising thing to read was that trade union Unite have said offshoring is ineffective due to increase in staff turnover and in wage.

How can offshoring be considered ineffective just because of changing staff and increase in wage when money earned is billions of dollars?

Pros and Cons of Globalization

Pros:

• Productivity grows more quickly when countries produce goods and services. This makes living standards can go up faster.
• The global economy can grow because of the sharing of ideas between countries.
• People can learn other countries' cultures and are able to spread their own cultures and traditions.
• There are more different types of jobs abroad. People from poor countries especially can earn their money and send to their own country.
• Better relationship between countries can be established. This makes better understanding between nations and keep them friendly.

Cons:

• People can lose jobs due to imports or production shifts abroad. Most find new jobs that pay less.
• It makes rich richer and poor poorer. It is good for managers and investors but is not for workers.
• Causes communicable diseases such as HIV and AIDS
• People working abroad are sometimes not provided with good working conditions at minimum wages.
• Dominant countries can overwhelm other countries' power or will. They can also have impact on other countries cultures.