Dubai American Academy

Offshore outsourcing is the method that firms use to get cheap foreign labor to manufacture goods or provide services only to sell them back into the domestic marketplace. Today, many Americans are concerned about the issue of whether American multinational companies will continue to export jobs to cheap overseas labor markets. In the fall of 2003, the University of California-Berkeley showed that as many as 14 million American jobs were potentially at risk over the next decade. In 2004, the United States faced a half-trillion-dollar trade deficit, with a surplus in services. Opponents of offshoring claim that it takes jobs away from Americans, while also increasing the imbalance of trade. This is because local citizens aren't getting jobs because of the MSCs giving jobs to foreigners and threatening the welfare of the country and increasing the imbalance.

While many economists assume that FDIs bring in jobs for the local developing economy, in reality, the multinational company needs to be filled and can not always be filled by local workers’. This is due to the lack of skill/education available in developing countries, hence causing MNCs to bring in foreign workers therefore preventing locals from gaining jobs in the workforce. Additionally, the country does not gain extra revenue because often, firms take their money back to their own home country. While governments try to increase taxes when more MNCs operate, it is also difficult for the government to account for these taxes.

By referring to MNCs entering the market, people assume that MNC’s will pass on knowledge and latest technology to developing countries. However, In reality, MNC’s want to hold on to knowledge and latest technology in order to maintain competitive advantages so will not enter the country to benefit their market. This can also be seen by how the local companies can go out of business and hence, causing loss of jobs (of the local people) and instead, jobs gained by foreigners that come in. Lastly, while many believe that MNCs enter the country and tend to invest more, labor laws might discourage MNCs from investing because of higher costs hence, acting as a disadvantage.