Archived — Research Summaries: Working Paper 2009-01: Canadian Policy Responses to Offshore Outsourcing

By Daniel Trefler.

This policy brief is a summary of the views on offshore outsourcing expressed by Canadian and international thought leaders at two conferences co-organized by Industry Canada and the Rotman School of Management. The "Roundtable on Offshoring" was held on March 30, 2005 at the Chateau Laurier, Ottawa and led to the commissioning of 16 new studies that fully describe all that is relevant to Canadian policy makers about the rise of offshore outsourcing. The papers were then presented at a conference held on October 26–27, 2006 at the Rotman School of Management, University of Toronto.

From these papers and the lively conference debates comes a comprehensive inventory of possible policy responses to the rise of offshore outsourcing. These policies are reviewed here and the effectiveness of each is evaluated. Section 4 of the paper is particularly important as it presents the most effective policies, namely, those that are proactive. The key proactive issue is Canada's ability to sell innovative products abroad. This ability is being threatened by increased offshore outsourcing to low-wage countries such as China and India and the threat will become a major one if and when these low-wage countries become major innovators. The right policy mix must address Canada's current innovation gap.

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