Answer to Question #149287 in Economics of Enterprise for Pearl

Question

Explain why sourcing raw materials from abroad have a limited impact on
the domestic economy?

Answer 1

International sourcing is a way of sourcing of materials, products and services from the worldwide market across the geopolitical boundaries. It's main objective is to exploit the global efficiency in delivering materials, goods and services.

It weakens the competitive advantage of firms because of the possibility of leaking confidential information.

Decrease in demand of the local materials since the global sourced materials are at a cheaper prices.

Reduced cash flow at the home country.