Economic fiction vs. economic reality: 

This is the official version of why labor must be outsourced at exorbitantly low prices in maquilas and Export Processing Zones for the sake of efficiency and competitiveness:

Neoliberal economists tell a story in which at least three benefits putatively follow when production is more efficient. First, the global economy is more productive, so there is more wealth to share among the world’s people. Second, products are less expensive, so goods are more accessible to consumers, many on limited budgets. And, third, more money flows into LDCs [Less Developed Countries] and into the pockets of poor workers there, thus contributing to a reduction in the global incidence of poverty.”¹

Reality, far from the dogmatic (and ludicrous) fictions and generalizations of neoliberalism, is this: 

The air the export processing zones are built upon is the promise of industrialization. The theory behind EPZs is that they will attract foreign investors, who, if all goes well, will decide to stay in the country, and the zones’ segregated assembly lines will turn into lasting development: technology transfers and domestic industries. To lure the shallows [as factories are known in this scheme] into these clever trap, the governments of poor countries offer tax breaks, lax regulations and the services of a military willing and able to crush labor unrest. To sweeten the pot further, they put their own people on the auction block, falling over each other to offer up the lowest minimum wage, allowing workers to be paid less than the real cost of living.²

The consequences of this scheme are sadly evident. No, there is no more wealth to share with “the world’s peoples,” only more poverty since each actor in a sweatshops’ hiring chain keeps his or her share so that the worker at the end of it is the one to whom money is deducted from his or her pay. No, the products are not less expensive for the general public because otherwise markups as high as 400% between the cost of production and retail price would not be attained (and also for the simple reason that offering cheaper products devalues brand perception). And no, this economic model does not contribute to reducing world poverty, it exacerbates it by leaving a considerable portion of workers in developing countries at the mercy of unconscionable businessmen who operate outside the labor, legal and fiscal regulations of their countries. 

“The determining factor in global corporate production is poverty,” say Hedges and Sacco, 

The poorer the worker and the poorer the nation, the greater the competitive advantage. With access to vast pools of desperate, impoverished workers eager for scraps, unions and worker conditions no longer impede the quest for larger and larger profits. And when corporations no longer need this workers, they are cast aside to sleep in the woods or on heating grates. They become dependent on the charity of others. Once the workers […] get older, loosing the agility and endurance of the young, most crew leaders refuse to hire them. Many head back to [their countries of origin] as poor as when they arrived.³

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1. Chartier, “Sweatshops Labor Rights and Competitive Advantage,” 154. ↩︎
2. Naomi Klein, No logo, 206. ↩︎
3. Hedges and Sacco, Days of Destruction, Days of Revolt, 194. ↩︎