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Offer an explanation why offshoring through the formation of global value chains or foreign direct investment...

Offer an explanation why offshoring through the formation of global value chains or foreign direct investment may overturn the rationale from trade in final goods.

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Answer #1

Offshoring is when a particular company bases some of its processes abroad. The aim of this is to take advantage of lower cost operations overseas.

Offshoring has a huge impact on the trading of the final goods. With the help of offshoring, companies can reduce their costs of production. This will help them produce more and increase their trade.

Reduction in the cost of operations might lead to expansion of the trading business of the firm.

Offshoring can also help the company improve its productivity by hiring of employees overseas who are expert in handling particular operations.

All this will help the firms to increase their trade in final goods with the help of offshoring.

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