Participating in a debate on offshore outsourcing in The Wall Street Journal last week, Professor Jagdish N. Bhagwati of the Columbia University and Paul Craig, chairman of the Washington-based think tank, the Institute for Political Economy, addressed various aspects of the subject.

Craig said it was “hard to see the benefit to the country [the U.S.] whose firms outsource.” According to him, with domestic capital and technology reallocated to the employment of foreign labor, there would be less to employ domestic labor.

“As industries move offshore, suppliers are forced to follow. The domestic economy becomes a less efficient place to produce as concentrations of skills are diluted by movement offshore.”

Bhagwati, an expert on trade and defender of offshore outsourcing, quoted Bureau of Labor Statistics for the period 1999-2002 which showed that despite the furore over outsourcing, jobs in four information technology sectors had expanded, albeit slowly. He identified a “not as strong” social safety net in the U.S. as a major factor hampering adjustment to import competition.