jetpack domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /mnt/stor08-wc1-ord1/694335/916773/www.tvhe.co.nz/web/content/wp-includes/functions.php on line 6131updraftplus domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /mnt/stor08-wc1-ord1/694335/916773/www.tvhe.co.nz/web/content/wp-includes/functions.php on line 6131avia_framework domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /mnt/stor08-wc1-ord1/694335/916773/www.tvhe.co.nz/web/content/wp-includes/functions.php on line 6131🙂 Bloody economists. They go on about the short-run then their estimates fly around everywhere. I agree that fluctuations can have a disproportionate impact on what people see as the medium term level of the exchange rate, but the long-term level should be based on fundamentals.
For example, the $NZ/$US should be about 0.65 in my mind if the long term interest rate differential and the higher food prices hold up (structural issues). However, in the medium term (next 3 years say) I can see us staying in the 70s.
I agree that ex-US labour is cheaper. But ex-US labour will still be cheaper for a while, the trend of increasing outsourcing will continue irrespective of the exchange rate methinks. I agree that there are systems in place, but like you were saying ex-US labour is cheaper, so firms would be using that if there wasn’t capacity bottlenecks in the way, that is where continued infrastructural investment will be required.
As a result, the change in the exchange rate should not matter, as overseas labour is currently significantly cheaper, even at this low rate of the dollar. Outsourcing will only increase if US companies can manage to increase there facilities overseas – this will depend on credit markets.
I expect outsourcing to happen, it part of globalisation. If we had freer international labour markets, more of the labour might move to the US, rather than the current state of heavy offshore investment. There is nothing wrong with outsourcing. Workers in developed nations have had a monopoly position on specific jobs for a long time, and no-one likes monopolies.
]]>Still, ex-US labour is still cheap even at the dollars record lows, but as the dollar increases the number of firms now viewing it as a sellable strategy to The Board would increase.
Also, most of the costs usually born by the first movers in outsourcing would have been covered already. (As more companies do it, the easier it is for companies following them.) Systems have been set up in China and India to specifically train people to be out-sourced workers.
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