Introduction : Motivation And Research Question Essay
The modern world has become more involved and advanced in information technology, which introduces new opportunities for international trade to make an impact. For instance, imagine calling Dell customer service for a technical problem and the other person on the line is in India. This is a common example of service outsourcing or offshoring where a company decides to set up their own service center or have a firm perform those services in another country. Since information technology is a tradable industry in which it is a service that can be performed from long distances since the worker performing the service does not need to be in the same room as the customer it can be outsourced.
Many individuals are skeptical of the decision of companies in the United States to outsource certain services when there are skilled workers in the United States that are more than capable of performing these tasks. However, it is the concept of comparative advantage that is behind the reasoning of companies outsourcing since developing areas such as India have a lower opportunity cost in labor-intensive work. Therefore, the companies and industries are able to take advantage of the lower cost labor as well as the ability to focus on what they specialize in. Thus, each country when engaging in international trade focus on what they have a comparative advantage in which results in the nation as a whole being able to produce more.