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The Economics of Outsourcing: How Should Policy Respond?

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  • Thomas Palley

Abstract

Outsourcing is a central element of economic globalization, representing a new form of competition. Responding to outsourcing calls for policies that enhance national competitiveness and establish rules ensuring acceptable forms of competition. Viewing outsourcing through the lens of competition connects with early 20th-century American institutional economics. The policy challenge is to construct institutions that ensure stable, robust flows of demand and income, thereby addressing the Keynesian problem while preserving incentives for economic action. This was the approach embedded in the New Deal, which successfully addressed the problems of the Depression era. Global outsourcing poses the challenge anew and calls for creative institutional arrangements to shape the nature of competition.

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  • Thomas Palley, 2008. "The Economics of Outsourcing: How Should Policy Respond?," Review of Social Economy, Taylor & Francis Journals, vol. 66(3), pages 279-295.
    • Handle: RePEc:taf:rsocec:v:66:y:2008:i:3:p:279-295
    DOI: 10.1080/00346760701821896
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    Cited by:

    1. Thomas I. Palley, 2006. "Rethinking Trade and Trade Policy: Gomory, Baumol, and Samuelson on Comparative Advantage," Economics Public Policy Brief Archive ppb_86, Levy Economics Institute.
    2. Thomas I. Palley, 2009. "Rethinking the economics of capital mobility and capital controls," Brazilian Journal of Political Economy, Center of Political Economy, vol. 29(3), pages 15-34.
    3. Thomas I. Palley, 2007. "Globalization and the Changing Trade Debate: Suggestions for a New Agenda," Economics Public Policy Brief Archive ppb_91, Levy Economics Institute.

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