[eru]

Is there any evidence outsourcing hinders, rather than helps formation of local industries?

As far as I remember, foreign direct investment has a pretty good track record in terms of helping countries develop. (As opposed to eg loans to businesses or government. Loans can plausibly lead to financial instability, when the hot money comes in and again when it leaves.)

[sooheon]

I won't claim that it's empirically proven to be harmful, obviously there are so many intricacies in every case. However, I don't think it's clear that it's an obvious boon for the country either.

S. Korea's development, for example, has shown that export oriented growth, where the margins between international prices and local labor costs are enjoyed by the exporters, is one of the most powerful ways for an economy to grow. Outsourcing, OTOH, is guaranteed to funnel those margins back to the multinational, with little but the pittance wages and some nominal tariffs left behind for the people of the country.