Offshore production
The world’s consumption of fashion is huge. The European Union imported textiles (clothing and carpets) to the value of €83.7 billion in 2010. Prices have fallen, too, with hand-finished shirts costing less than five euros. To make clothes at these low prices, companies have to keep costs down. They use offshore production to do this. Large companies make their products in developing countries where workers are paid much less than in developed countries.
A point that should be considered in that case is that developing countries encourage developed countries to invest in them to provide jobs. Supporters of overseas production point out that increased investment has positive effects in the long term. Nobel prize-winning economist Paul Krugman points out that the growth in manufacturing has an impact on the rest of the economy, because it reduces the number of people needing to work in agriculture and increases competition for labour. This leads to higher wages, which lead to other improvements, such as the ability to send children to school. On the other hand, the disadvantage of this foreign investment is the fact that it can have a negative impact on the economy of developed countries, because people lose their jobs when production is outsourced to other countries.
It seems that if multinationals are going to benefit from low production costs by using overseas suppliers, they should do more to improve the social situation-for example, by building schools for the children in those communities. It is also clear that multinationals should invest in communities in the developed countries where they sell their products. Furthermore, given multinationals do benefit from lower costs of production in developing countries and their workers, they need to feel obliged to protect the workers in overseas manufacturing plants.
