Manufacturing Outsourcing, Onshoring, and Global Equilibrium Harvard Case Solution & Analysis

The recent trend of onshoring manufacturing operations of global firms has been promoted by various countries to turn the slow economic growth. The article presents a regression model of cross-country that defines how manufacturing employment expedite a country’s growth, Foreign Direct Investment (FDI), and Purchasing Power Parity (PPP). The analyses of the year 2100 concluded that manufacturing playing a key role in global equilibrium with increasing levels of manufacturing results but lower level of manufacturing employment. The key reason that the countries want to transform their lower output manufacturing into higher output with low cost of  wages. It has become easier and accessible to produce quality goods in recent era of evolving infrastructure and human capital. The production is then outsourced to the countries having lower costs because of less-developed human capital and infrastructure. The model recommends that efforts to develop local manufacturing would consequently increase the wealth in the U.S., while the negative point is that such results would not have the sustainability for the future. In any case, the positive outcome is that the behavior of manufacturing is like the rising tide that would enhance our quality of life globally and raise all the countries.

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