Reshoring, Corporate Strategy & Globalization — Overriding Low Wages & Low Taxes? …. Not Likely.

Over the last two years the Boston Consulting Group published two studies assessing global business strategy and leadership in the era of globalization.
Two salient conclusions jump out from these studies.
One, U.S. firms are likely to return some off-shore manufacturing jobs to the U.S.
Two, corporate leadership requires understanding the global system, setting global priorities, and getting the corporation to embrace them.
It is clear that some manufacturing and non-manufacturing jobs located in China and even India may be relocated to the U.S. The primary reason for this is because wages are increasing in those countries.
It is also clear that corporate leadership demands understanding the global system. But many throughout the U.S., its political system and corporations find reasons not to embrace globalization. They see it as a threat and a cause of economic problems.
I have three observations.
One, jobs may well locate away from China and India, but most will relocate to even less expensive foreign locations such as Vietnam, Indonesia, Bangladesh and the Philippines.
Two, corporate strategy may well default to the cheapest strategy. Keep manufacturing offshore where wages are really low and off-shore profits are not taxable.
Three, federal and state economic development efforts based on the hope of reshoring is not very promising. However, the possibility is intriguing.
 My general conclusions.
 U.S. multinationals need to take a broader view of their corporate responsibility. One that is not ruled exclusively by shareholders but one that involves acknowledging responsibilities to their home community and workers. Good corporate governance involves responsible national citizenship. It’s good for business. In the long-run this is the most meaningful global strategy for multinational corporations.

About Stuart Malawer

Distinguished Service Professor of Law & International Trade at George Mason University (Schar School of Public Policy).
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