1. Costs vs Benefits --- An Evolving Debate
International Law and Economics
International Trade:
Costs vs Benefits An Evolving Debate

2. International Law and Economics
International Trade: The Costs of Trade
Offshore Outsourcing
- Hiring service providers where labour costs are lower.
- Sometimes call “contracting out” (internal production moved to external production)
- Secondary Industry - Manufacturing – Clothing Industry – initial example.
- Tertiary Industry – Service Industry – Offshore Call Centres – recent (internet) example
- Questions about Job Loses? What Kind of Jobs?
Human Rights and Labour Abuses
- Exploitation of Workers in Countries with Few Legal Protections – Corruption.
- Physical and Sexual Abuse, Non-Payment of Wages, Denial of Food and Health Care Excessive Working Hours.
- Child Labour is one problem focused on by the International Labour Organization.
Environmental Degradation
- Businesses can look for countries that fail to have adequate legal protection for the environment.
- This lowers the cost of business – fewer regulations, procedures, equipment
Ex. Electronic Recycling
Ex. Metal / Ship Recycling
Ex. Clothing – CBC - Made in Bangladesh:

3. International Law and Economics
International Trade: The Benefits of Trade
Access to Markets
- International Market (7 billion) is 200 times the Domestic Market (35 million)
- A Global Product:
Is easiest transferred to new Markets – Standardized - Camera
- People in different cultures / markets have different tastes and preferences.
- Product Adaptation in a Global Market
Ex. Oreo Cookies (Kraft Foods)
Cheaper Labour
- Labour is the largest expense within the cost of making a good / service
- Therefore: Lower wages usually mean Lower Prices
- Growing Business Practice – Offshore Outsourcing
Ex. Clothing – CBC - Made in Bangladesh:
Increased Quality of Goods
- Taking advantage of the “Advantages” – increased Quality in different countries
Ex. BMW X5 “Luxury Car”
Engine -- Germany
Interior Fixtures (ex mirrors -- Magna Corporation in Canada
Leather -- South Africa
Tires -- France
Production / Manufacturing Plant -- Spartanburg, South Carolina

4. International Law and Economics
International Trade: Benefits for Business
Increased Quantity
- International Market -- Potential for Increased Sales -- Increased Demand
- Companies may need to step up Production to meet Demand.
Ex:
- Increased Hours and Employment
- Increased Efficiency and Productivity
- New Production Technologies
- New Facilities / Location
Access to Resources
- International Trade and Business give business to all 3 Types of Resources
1. Natural Resources
2. Human Resources
3. Capital Resources
Ex. DeBeers in Canada: