Offshoring high-skilled workers is not a zero-sum game

Published on 15 March 2012

Multinational firms outsourcing or offshoring their operations to developing countries is a problem as old as globalisation. This column looks at the effect on high-skilled labour in the home country. It presents evidence that, on average, when firms start employing high-skilled workers offshore, they also increase the number of this type of worker employed at home.

Multinational firms outsourcing or offshoring their operations to developing countries is a problem as old as globalisation. This column looks at the effect on high-skilled labour in the home country. It presents evidence that, on average, when firms start employing high-skilled workers offshore, they also increase the number of this type of worker employed at home.

It has been well documented that US and European multinationals have expanded the amount of high-tech investment and innovative activities carried out offshore (OECD 2008). There is evidence that firms may offshore innovation activities not only to adapt products to local conditions but also to develop state-of-the-art technology.