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Case Study: p.565 , Global Profits, Baker/Hartman/Shaw - Book Report/Review Example

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Case Study: p.565 , Global Profits, Baker/Hartman/Shaw

The writers of the article want to suggest that it is unethical on part of K-PAN to outsource the goods from low-wage countries where working conditions are dismal.
K-PAN moved to Nicaragua establishing its manufacturing facilities and outsourced its major supply from Indonesia and Pakistan. K-PAN just followed the good economics that supports the principle of comparative advantage. After all “Survival of the Fittest” is the natural law. Per capita incomes in developing countries usually range between one-tenth and one-fifth of that prevails in the developed world. Due to this, services are significantly cheaper in those countries when compared with those that prevail in the developed world. That is why the World Bank measures incomes of the people in developing countries in terms of purchasing power rather than at exchange rates of currencies.
Developed countries have not reached to their current state overnight; they have also passed through the same path that developing countries are treading now. Developing countries are starved off resources; they need technology, management expertise, capital from the developed world. What they can provide is abundant low-cost labor (in relation to the developed world) and even that possibility is taken off from them then they have no chance to come out from dire poverty that are facing today. It is difficult to agree with the stance that they are being exploited by the companies from the developed world. After gaining employment they move one notch higher not only economically but they become equipped with new skills that these companies impart them. That is how wages of the people in the developing world move upwards with the passage of time.
It is a fact that after globalization, income levels in the third world countries have improved significantly due to increased employment levels and revenues collected by the governments in the form of taxes and duties. Increased revenues help governments to spend on ...Show more
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Summary

Usual economic laws that are applied within national boundaries have gone into disarray. When global trade was minimal, imports were not disrupting local economies. K-PAN was doing well for as long as 50 years; however, things…
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