Question

Offshore financial services in small countries (especially in less developed countries) ensue tax breaks and privacy for businesses, including companies, yet some people strongly believe that it is disadvantageous to the U.S. economy. Identify and explain three major reasons why or why not?

Answer 1

Offshoring is one of the most cost-effective ways of achieving a global presence ehile reducing the cost of doing business in today's global economy. It can mske thr difference between a company's success and failure. But some people believe that is a disadvantage to the US economy. Disadvantages: Offshoring, the practice of moving production to foreign locales while continuing to sell goods to US market, is a pervasive feature of the US economy. An ineffective tax structure further encourages the relocation of assets and production to foreign countries with lower costs. It increases Unemployment. The biggest criticism versus companes that offshore is that it increase the level of unemployment of the US economy. Quality control can be n issue and ensuring that the product is manufactured according to US companies standard may not be as easy and the barriers pertaining to language, culture, and overseas supply chains can also effect quality control. The effect that offshoring has on domestic employment rates when jobs are sent offshore can have a negative effect on United States economy. Advantages: Offshoring creates value for individual American companies and frees US resources for activities with more value added. For example, firms pass cost savings on to cunsumers through lower prices and to investors, in US, through higher profits. Wage comparison between paying employees in Us and paying foreign workers in developing nations is quit substantial. US employers can save from insurance, taxes, workers compensation, medicare etc. Offshoring helps unemployment in small countries and put more capital into a developing economy to help improve living standards and infrstructure. it can also reduce immigration problems because lacals would no longer need to work abroad or move to US to earn enough to support their families. This helpsUS to improve social cohesion, prosperity and immigration problems.