Consider two stages of production of mobile phones: research and development (R&D), and component production. Suppose...

Consider two stages of production of mobile phones: research and development (R&D), and component production. Suppose U.S. firms have comparative advantage in R&D, and Indian firms have comparative advantage in component production. Assume realistically that inflows of engineers from India to the U.S. reduces cost of R&D in the U.S.

Explain the effects of inflows of engineers from India on the pattern of offshoring by U.S. firms and on the gains from offshoring.

Expert Solution

Rahul Sunny answered 2 years ago

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