The American industry will be at a 'competitive disadvantage' if it does not outsource jobs to countries like India, a leading economist has said.

Pointing out that the outcry against outsourcing was only in the United States and not in the United Kingdom, Columbia University Prof and economist Jagdish Bhagwati said at an IMF Forum in Washington that self interest demands that US engages in outsourcing as avoiding it will place its industry at a competitive disadvantage.

• India and Outsourcing: Complete Coverage

Expressing surprise at Democratic Presidential frontrunner John Kerry's stand on outsourcing, Bhagwati said on Wednesday that he had discussed globalisation with Kerry three years ago when the Senator told him that he would leave immigration to the ILO (International Labour Organisation) and trade to the WTO (World Trade Organisation).

He, however, noted that Kerry in his speeches spoke not so much about 'outsourcing' meaning jobs, but 'offshoring' meaning shifting capital to other countries

Bhagwati said that at one time there was talk of Yellow Peril -- alleged unfair competition from Japan and now it is Brown Peril -- outsourcing in India, adding that the US goes bananas every few years over one 'imagined peril or another.'

"There was a similar outcry when US textiles or steel could not compete with imports. When Japanese cars were competing with American, there was an outcry about imports of automobiles."

"Trade-related intellectual property rights, arguments about cheap labour and so were all in the same category," he said.

Raghuram Rajan, Economic Counsellor and Director of the IMF Research Department, chaired the event.