Labor and Employment Law Commons^™

The Muddles Over Outsourcing, Jagdish N. Bhagwati, Arvind Panagariya, T.N. Srinivasan

Faculty Scholarship

In the early 1980s, “outsourcing” typically referred to the situation when firms expanded their purchases of manufactured physical inputs, like car companies that purchased window cranks and seat fabrics from outside the firm rather than making them inside. But in 2004, outsourcing took on a different meaning. It referred now to a specific segment of the growing international trade in services. This segment consists of arm’s-length, or what Bhagwati (1984) called “long-distance,” purchase of services abroad, principally, but not necessarily, via electronic mediums such as the telephone, fax and the Internet. Outsourcing can happen both though transactions by firms, like …