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In Search of ‘Offshoring’: Evidence from U.S. Imports of Services

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  • Desirée Van Welsum

    (Department of Economics, Mathematics & Statistics, Birkbeck)

Abstract

This paper explores the relationship between imports of services by the United States and the international sourcing of services production activities using a number of different panel data estimators for a number of different categories of services. A conventional import demand relationship is augmented by measures of the activity of foreign-owned affiliates in the US and USowned service sector affiliates in other countries. There is a clear effect from production relocation on US imports of services. Outward investment in US-owned service sector affiliates is found to have a positive impact on import volumes. This is consistent with what might be expected if one motivation for such investments is to internationally source activities previously undertaken within the United States. Inward investment in the US service sector is found to reduce imports of services, other things being equal, pointing to substitution of trade and investment in services. However, inward investment in non-service sectors is found to stimulate imports of services, indicating complementarity at the aggregate level.

Suggested Citation

  • 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.
    • Handle: RePEc:bbk:bbkefp:0402
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    File URL: https://eprints.bbk.ac.uk/id/eprint/27104
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    Cited by:

    1. Desireé van Welsum & Xavier Reif, 2009. "We Can Work It Out: The Globalization of ICT-Enabled Services," NBER Chapters, in: International Trade in Services and Intangibles in the Era of Globalization, pages 289-325, National Bureau of Economic Research, Inc.
    2. Ad van Riet & Moreno Roma, 2006. "Competition, productivity and prices in the euro area services sector," Occasional Paper Series 44, European Central Bank.

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    More about this item

    Keywords

    Multinationals; foreign direct investment; imports of services; GATS modes of supply; global sourcing; offshoring and international outsourcing; panel data estimation.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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