Explain the Relationship of Outsourcing to Global Value Chains

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The Answer is Outsourcing is when producers take activities that they once did in-house and farm them out to other firms in remote locations. Outsourcing is part of a larger process that is called the creation of global value chains, which are sets of linked operations that organize the production of any particular product. All these activities are linked together in a chain of operations. In the era of deglobalization, it was common for many of these processes to be carried out in-house, under one roof. This means that the value chain was compact and geographically contained. But in recent years, as transportation and communication costs have declined and as a means of locating cheaper labor, companies have turned to breaking apart various components of the value chain and moving (i.e., outsourcing) the various operations to remote locations. Activities that were once carried out under one roof now take place hundreds of miles away.

Explain the Relationship of Outsourcing to Global Value Chains

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