Abstract

International outsourcing is a growing phenomenon in manufacturing industries due to the limited resources and the economic benefits of this phenomenon. Although international outsourcing seems to be a cost efficient way of production, the concerns about its CO₂ emissions are rising dramatically. In this research, the impacts of international outsourcing on the CO₂ emissions of all industries have been quantified. Input output analysis and linear programming have been implemented by programming in the Matlab as the research methodology. Australian manufacturing industry (outsourcer) and Chinese manufacturing industry (outsourcee) and their main suppliers that emit high CO₂ levels were selected as a case study. The results of this study depict that international outsourcing of Australian manufacturing industry will reduce not only the CO₂ emissions of that industry but also the CO₂ emissions of the other domestic industries in Australia. In contrast, this international outsourcing will increase the CO₂ emissions of both China and the other countries’ industries. This will lead to the growth of global CO₂ emissions. In the worst case scenario, if the Australian manufacturing industry shuts down all its production, China and other countries CO₂ emissions will increase 4.88% and 0.05% respectively. On this occasion, global CO₂ emissions will increase by 0.82%. This paper presents a decision support system that will be useful for policy makers to evaluate the effect of different international outsourcing scenarios on CO₂ emissions before making any real outsourcing decisions.

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