IMMIGRATION VERSUS OUTSOURCING: A DEVELOPING COUNTRY¡¯S VIEW

This paper provides a comparative study between temporary immigration policy and product outsourcing process, from the low-income developing country¡¯s point of view, which is supply side constrained by the availability of skilled labour. A two-country general equilibrium model establishes an inverse relationship between temporary immigration quota and product outsourcing. Though temporary immigration quota enhances world welfare and the developed country welfare, its impact on welfare level of the developing country is uncertain. In the empirical part, a panel data analysis shows that real consumption level of a set of developing countries increases with an increase in product outsourcing, given an inverse relationship between product outsourcing and temporary immigration policy.