Assignment Task:
The opportunity cost of choosing one option is the missed chance or benefit of not choosing the alternative (Froeb et al., 2018). The functional rationale behind this shift would be cost effectiveness, whereby textile manufacturers are essentially taking advantage of low production costs. Another reason is the prevailing consumer preference for lower-priced goods, especially clothing, forcing manufacturers to prioritize production at a cost that would ensure goods are priced competitively. Also, manufacturers want to improve their profit margins, and this can only be achieved by lowering costs, meaning that production is almost certainly moved overseas where lower production cost is guaranteed to some degree (Sok, 2017).
However, examining this shift from the prism of opportunity cost, the foregone alternative of this decision is that local employment opportunities are shipped overseas. Which has a pronounced adverse effect on the local economy, particularly the towns that play host to these manufacturing concerns. This multiplier effect eventually leads to job losses, which in turn leads to less flow of money, further leading to reduced economic output (Sok, 2017). Also, is a missed opportunity to reinvigorate the manufacturing sector of the US economy which has a reputation for creating high-wage jobs and technological advancement.
This shift has affected the local economy in two ways; on a positive note, it benefits the textiles industry by reducing costs whilst maximizing profit. While, on the negative side is the loss of manufacturing jobs, and the shrinking of the manufacturing sector leading to economic hardship.
The gains and losses in comparison are that short-term gains of cost savings and increased profits would be overridden by the more adverse effects of job losses and the general economic downturn as a result of the shift.
References:
Froeb, L. M., McCann, B. T., Ward, M. R., & Shor. (2018). Managerial economics (mindtap course list) (5th ed.). Cengage Learning.
Sok, H. (2017, February 1). Why us garment manufacturing has moved overseas.