IDEAS home Printed from https://ideas.repec.org/a/wsi/gjexxx/v01y2012i02ns2251361212500097.html
   My bibliography  Save this article

The Economics Of Offshoring

Author

Listed:
  • WINSTON W. CHANG

    (Department of Economics, SUNY at Buffalo, Buffalo, NY 14260, USA)

Abstract

This paper examines various economic issues on offshoring (international outsourcing). It begins with a discussion of the factors that determine a firm's decision to offshore and illustrates, with simple models, the cost saving of offshoring certain stages of production and the advantages of specializing in some input production and engaging in input trade. The paper then examines the recent trend in offshoring with special emphases on the rise of IT offshoring and the characteristics of firms engaging in offshoring and exporting. The effect of offshoring and national welfare is then discussed in light of numerous results in recent empirical studies. Finally, after examining the current US programs to aid the displaced workers, the paper discusses various short-run and long-run policy proposals to alleviate the negative impacts of offshoring.

Suggested Citation

  • Winston W. Chang, 2012. "The Economics Of Offshoring," Global Journal of Economics (GJE), World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 1-26.
    • Handle: RePEc:wsi:gjexxx:v:01:y:2012:i:02:n:s2251361212500097
    DOI: 10.1142/S2251361212500097
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S2251361212500097
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S2251361212500097?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. J. Bradford Jensen & Lori G. Kletzer, 2008. ""Fear" and Offshoring: The Scope and Potential Impact of Imports and Exports of Services," Policy Briefs PB08-1, Peterson Institute for International Economics.
    2. David L. Hummels & Dana Rapoport & Kei-Mu Yi, 1998. "Vertical specialization and the changing nature of world trade," Economic Policy Review, Federal Reserve Bank of New York, vol. 4(Jun), pages 79-99.
    3. Phelps, Edmund S, 1994. "Low-Wage Employment Subsidies versus the Welfare State," American Economic Review, American Economic Association, vol. 84(2), pages 54-58, May.
    4. J. Bradford Jensen & Lori G. Kletzer, 2005. "Tradable Services: Understanding the Scope and Impact of Services Outsourcing," Working Paper Series WP05-9, Peterson Institute for International Economics.
    5. Lori G. Kletzer & Robert E. Litan, 2001. "A Prescription to Relieve Worker Anxiety," Policy Briefs PB01-02, Peterson Institute for International Economics.
    6. Catherine L. Mann, 2003. "Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth," Policy Briefs PB03-11, Peterson Institute for International Economics.
    7. Lori G. Kletzer, 2001. "Job Loss from Imports: Measuring the Costs," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 110.
    8. Lael Brainard & Robert Litan, 2004. "Outsourcing, Offshoring - Service Offshoring: Bane or Boon and What to Do?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(02), pages 3-7, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Beissinger, Thomas & Chusseau, Nathalie & Hellier, Joël, 2015. "Offshoring and Labour Market Reforms: Modelling the German Experience," IZA Discussion Papers 8920, Institute of Labor Economics (IZA).
    2. Thomas Beissinger & Nathalie Chusseau & Joel Hellier, 2014. "Offshoring, employment, labour market reform and inequality: Modelling the German experience," Working Papers 330, ECINEQ, Society for the Study of Economic Inequality.
    3. Beissinger, Thomas & Chusseau, Nathalie & Hellier, Joël, 2016. "Offshoring and labour market reforms in Germany: Assessment and policy implications," Economic Modelling, Elsevier, vol. 53(C), pages 314-333.
    4. Morganti, Daniele & De Giovanni, Pietro, 2022. "Offshoring motivations driven by sustainability factors," Research in Transportation Economics, Elsevier, vol. 95(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rosario Crinò, 2009. "Offshoring, Multinationals And Labour Market: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(2), pages 197-249, April.
    2. J. Bradford Jensen & Lori G. Kletzer, 2005. "Tradable Services: Understanding the Scope and Impact of Services Outsourcing," Working Paper Series WP05-9, Peterson Institute for International Economics.
    3. Jagdish Bhagwati & Arvind Panagariya, 2004. "The Muddles over Outsourcing," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 93-114, Fall.
    4. J. Bradford Jensen & Lori G. Kletzer, 2010. "Measuring Tradable Services and the Task Content of Offshorable Services Jobs," NBER Chapters, in: Labor in the New Economy, pages 309-335, National Bureau of Economic Research, Inc.
    5. Philipp Engler & Michael Fidora & Christian Thimann, 2009. "External Imbalances and the US Current Account: How Supply‐Side Changes Affect an Exchange Rate Adjustment," Review of International Economics, Wiley Blackwell, vol. 17(5), pages 927-941, November.
    6. Rosario Crinò, 2010. "Service Offshoring and White-Collar Employment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(2), pages 595-632.
    7. Kent Eliasson & Pär Hansson, 2016. "Are workers more vulnerable in tradable industries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 283-320, May.
    8. Mary Amiti & Shang-Jin Wei, 2005. "Fear of service outsourcing: is it justified? [‘Location of vertically linked industries: agglomeration versus comparative advantage’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 20(42), pages 308-347.
    9. Jacob Funk Kirkegaard, 2005. "Outsourcing and Offshoring: Pushing the European Model Over the Hill, Rather Than Off the Cliff!," Working Paper Series WP05-1, Peterson Institute for International Economics.
    10. Lori G. Kletzer, 2004. "Trade‐related Job Loss and Wage Insurance: a Synthetic Review," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 724-748, November.
    11. Martin Tobal, 2019. "A model of wage and employment effects of service offshoring," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 303-338, February.
    12. Ramya Vijaya, 2007. "Trade, Job Losses and Gender: A Policy Perspective," Forum for Social Economics, Taylor & Francis Journals, vol. 36(2), pages 73-85, January.
    13. Liu, Runjuan & Trefler, Daniel, 2019. "A sorted tale of globalization: White collar jobs and the rise of service offshoring," Journal of International Economics, Elsevier, vol. 118(C), pages 105-122.
    14. Ramya Vijaya, 2007. "Trade, Job Losses and Gender: A Policy Perspective," Forum for Social Economics, Springer;The Association for Social Economics, vol. 36(2), pages 73-85, October.
    15. Tjader, Youxu Cai & Shang, Jennifer S. & Vargas, Luis G., 2010. "Offshore outsourcing decision making: A policy-maker's perspective," European Journal of Operational Research, Elsevier, vol. 207(1), pages 434-444, November.
    16. Ramkishen Rajan & Sadhana Srivastava, 2005. "An Overview of the Economics of Outsourcing," ARTNeT Policy Briefs 3, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    17. Robert E. Yuskavage & Erich H. Strassner & Gabriel W. Medeiros, 2006. "Outsourcing and Imported Services in BEA’s Industry Accounts," BEA Papers 0059, Bureau of Economic Analysis.
    18. Robert E. Yuskavage & Erich H. Strassner & Gabriel W. Medeiros, 2009. "Outsourcing and Imported Services in BEA's Industry Accounts," NBER Chapters, in: International Trade in Services and Intangibles in the Era of Globalization, pages 247-283, National Bureau of Economic Research, Inc.
    19. Desirée Van Welsum, 2004. "In Search of ‘Offshoring’: Evidence from U.S. Imports of Services," Birkbeck Working Papers in Economics and Finance 0402, Birkbeck, Department of Economics, Mathematics & Statistics.
    20. Lael Brainard & Robert Litan, 2004. "Outsourcing, Offshoring - Service Offshoring: Bane or Boon and What to Do?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(02), pages 3-7, October.

    More about this item

    Keywords

    Offshoring; outsourcing; fragmentation; gains from offshoring; input trade and specialization; IT offshoring; economic welfare; US policies and reform proposals; A10; D21; D22; D63; F16; J28;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:gjexxx:v:01:y:2012:i:02:n:s2251361212500097. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/gje/gje.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.