Offshoring is the establishment of business operations outside national borders. The process of moving businesses outside of these borders involves gaining an advantage through tax breaks, lower wages, lower transportation costs, and/or relaxed regulations (“Offshore Definition,” 2014). Many companies are transforming into horizontal or vertical multinationals. Horizontal multinationals produce the same goods or services as abroad. This foreign direct investment (FDI) aims to strategically place production closer to the target market. This provides transportation cost benefits while enhancing learning associated with local needs. A vertical multinational is one that fragments part of its assets to take advantage of lower costs (i.e. cheap labor). Markusen and Maskus found that horizontal multinationals replace trade, while a vertical multinational is positively correlated with trade (Markusen & Maskus, 2001). In the United States, critics of offshoring say it eliminates jobs and exploits poor conditions in low-wage countries. Others claim that this practice has emptied public tax coffers; the erosion of Social Security, Medicare, workers' compensation, and other payroll deduction funds (Konrad, 2004). Proponents of offshoring believe it improves job opportunities and overall national wealth. Their logic, allowing other countries to produce and export complementary/intermediate products to the United States, allows the United States to focus its resources and capital on "higher" value-added steps within of the overall value chain. Measures with higher added value create better-paid jobs and make better use of resources. Greater and more efficient use of resources improves the country's overall paper consumption......on average by 2.5%. This continued growth ensures that the overall economy is not negatively affected by increased offshoring activities. (“Trade stats express”, 2014) Works Cited Gerber, J. (2011). International economy. (5th ed.). Upper Saddle River, New Jersey: Prentice Konrad, R. (April 9, 2004). Offshoring jobs could deplete public coffers, critics warn. The Florida Times Union. Retrieved from http://jacksonville.com/tu-online/stories/040904/bus_15301679.shtmlMarkusen, J. and Maskus, K. (2001). General equilibrium approaches to the multinational enterprise: A review of theory and evidence. Retrieved from website: http://www.columbia.edu/~dew35/PDF files/GeneralEquilibrium.pdfOffshore definition. (2014). Retrieved from http://www.investopedia.com/terms/o/offshore.aspTrade stats express. (April 10, 2014). Retrieved from http://tse.export.gov/TSE/TSEhome.aspx