Well allow me to retort.
Actually I mostly agree with you.
1) Absolutely there are limits to growth. You eventually run out of people in poverty who you can pay to do crap jobs. Then the cheap shit stops being cheap. It becomes expensive, and nobody wants expensive shit. I'm not sure it’s what you meant, but when you say:
"This transition to higher living standards through outsourced labor is running into … limits."
you are suggesting it’s the outsourced labor that’s the problem. I suggest it’s the higher living standards period that is running into sustainability limits. It’s our already high living standards not their improving living standard that’s the main cause of that. It’s not fixed by telling the world’s poor "You cannot work your way toward having what we have." It’s fixed by us accepting decreases to our living standards
Despite limits to growth the outsourcing of crap jobs to places with cheap labor is the most effective (only) way that vast numbers of people around the world can be raised out of poverty.
2) Yes you need more than just pouring money into a place to permanantly increase standards of living. China’s stable communist government that genuinely seems focused on the greatest good for the greatest number of its citizens (to the exclusion of concern for the individual which is reflected in their disregard for human rights) has allowed china to ride the gravy train to middle class in a way that no other nation could have.
But even if you create the required economic and governance environment in places like the Philippines and Thailand through UN diplomacy and IMF carrots and sticks you still then need to pay them to do something and that thing is going to be stuff that you can’t pay people in developed economies to do cheaply. i.e. cheap labor making cheap shit.
It’s still the process of global capitalism finding the cheapest place to get something done that in the end will grow the economies and the living standard of the worlds developing economies.