What you are not getting is that while outsourcing does mean cheap labour for Europe and US, it is not necessarily cheap for India(you mentioned keeping in-house). What you think is cheap are standard wages in India. It is cost cutting for US companies but not for Indian companies.

No, I do get that. Perhaps I wasn't clear.

I was trying to point out that these same pool of people (low-paid workers in India and/or China) are necessary to the economies of all developed economies. And so it's not really fair to say India isn't a developed economy simply because it contains this pool of people.

Certainly not.

Could you elaborate, please?

There are countries where all of the largest expenditures (except oil) are for products produced domestically by the non-poor classes.

Even here in the US. The only significant things that I, personally, spend money on that are significantly made overseas are my car, oil, and computer. Even if the price of those all doubled, it would still be only a small part of my budget.

The outsourcing epidemic is somewhat overstated.

I don't live in the US, but I was under the impression that the vast majority of consumer goods for sale were fabricated in China (or perhaps assembled from parts fabricated in China). Is that not your perception?

I may be wrong, but also, your purchasing habits may not be in line with the majority.

Or maybe you aren't talking about the US? I think the same is true of the UK - are you talking about other European countries? Which of them still has a significant manafacturing base?

The vast majority of my spending is not on consumer goods. I accept your point that I don't know the actual numbers for typical people.