One of the key drivers of downsizing and outsourcing is globalization. One result of globalization is the offshoring of jobs to developing countries. Outsourcing allows for products to be manufactured at lower wage rates in developing countries, which may result in losses in domestic manufacturing jobs.

a. Discuss the extent to which accounting systems capture the cost of downsizing incurred in a particular country. Do you think decisions to downsize would be different if all of the costs of downsizing borne by a society were captured by the accounting system of the reporting entity?

b. What ethical obligation, if any, do developed countries have to supply a safety net for workers who are displaced by effects of global competition? Explain.