IDEAS home Printed from https://ideas.repec.org/p/cda/wpaper/322.html
   My bibliography  Save this paper

Offshore Assembly From The United States: Production Characteristics Of The 9802 Program

Author

Listed:
  • Robert Feenstra
  • Gordon H. Hanson
  • Deborah Swenson

    (Department of Economics, University of California Davis)

Abstract

We study outsourcing from the United States under the offshore assembly program (OAP). Formerly called the 806/807 provision of the U.S. tariff code, and now renamed the 9802 provision of the Harmonized System code, this program allows U.S. firms to export component parts and have them assembled overseas. When the finished product is imported back into the United States, duties are paid only on the foreign value-added. We estimate the production characteristics of the U.S. OAP activity, and in particular, whether this activity is intensive in the use of non-production labor as compared to the overseas production. We also examine the sensitivity of OAP imports to real exchange rate movements.

Suggested Citation

  • Robert Feenstra & Gordon H. Hanson & Deborah Swenson, 2003. "Offshore Assembly From The United States: Production Characteristics Of The 9802 Program," Working Papers 322, University of California, Davis, Department of Economics.
    • Handle: RePEc:cda:wpaper:322
    as

    Download full text from publisher

    File URL: https://repec.dss.ucdavis.edu/files/UH7xxHgLMVfkf7uRkFcAgnUD/98-10.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Markusen, James R. & Melvin, James R. & Maskus, Keith E. & Kaempfer, William, 1995. "International trade: theory and evidence," MPRA Paper 21989, University Library of Munich, Germany.
    2. James R. Markusen & Anthony J. Venables, 2021. "The theory of endowment, intra-industry and multi-national trade," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 4, pages 69-94, World Scientific Publishing Co. Pte. Ltd..
    3. James R. Markusen & Anthony J. Venables, 1996. "Multinational Production, Skilled Labor and Real Wages," NBER Working Papers 5483, National Bureau of Economic Research, Inc.
    4. James R. Markusen & Anthony J. Venables, 2021. "Multinational firms and the new trade theory," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 3, pages 47-67, World Scientific Publishing Co. Pte. Ltd..
    5. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
    6. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-245, May.
    7. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 857-880.
    8. Alan Krueger, 1997. "Labor Market Shifts and the Price Puzzle Revisited," Working Papers 754, Princeton University, Department of Economics, Industrial Relations Section..
    9. Alan B. Krueger, 1997. "Labor Market Shifts and the Price Puzzle Revisited," Working Papers 754, Princeton University, Department of Economics, Industrial Relations Section..
    10. repec:hhs:iuiwop:430 is not listed on IDEAS
    11. Gordon H. Hanson, 1997. "The Effects of Offshore Assembly on Industry Location: Evidence from U.S. Border Cities," NBER Chapters, in: The Effects of US Trade Protection and Promotion Policies, pages 297-322, National Bureau of Economic Research, Inc.
    12. Deborah L. Swenson, 1996. "Explaining Domestic Content: Evidence from Japanese and U.S. Auto Production in the U.S," NBER Working Papers 5495, National Bureau of Economic Research, Inc.
    13. Feenstra, R.C. & Hanson, G.H., 1995. "Foreign Investment, Outsourcing and Relative Wages," Papers 95-14, California Davis - Institute of Governmental Affairs.
    14. Matsuyama, Kiminori, 1996. "Why Are There Rich and Poor Countries? Symmetry-Breaking in the World Economy," Journal of the Japanese and International Economies, Elsevier, vol. 10(4), pages 419-439, December.
    15. Sven W. Arndt, 1998. "Super‐Specialization And The Gains From Trade," Contemporary Economic Policy, Western Economic Association International, vol. 16(4), pages 480-485, October.
    16. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
    17. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
    18. Arndt, Sven W., 1997. "Globalization and the open economy," The North American Journal of Economics and Finance, Elsevier, vol. 8(1), pages 71-79.
    19. Jose Campa & Linda S. Goldberg, 1997. "The Evolving External Orientation of Manufacturing Industries: Evidence from Four Countries," NBER Working Papers 5919, National Bureau of Economic Research, Inc.
    20. Deborah L. Swenson, 1997. "Explaining Domestic Content: Evidence from Japanese and U.S. Automobile Production in the United States," NBER Chapters, in: The Effects of US Trade Protection and Promotion Policies, pages 33-54, National Bureau of Economic Research, Inc.
    21. repec:fth:prinin:375 is not listed on IDEAS
    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. Amador, João & Cabral, Sónia, 2008. "International fragmentation of production in the Portuguese economy: What do different measures tell us?," MPRA Paper 9783, University Library of Munich, Germany.
    2. Amador, João & Cabral, Sónia, 2009. "Vertical specialization across the world: A relative measure," The North American Journal of Economics and Finance, Elsevier, vol. 20(3), pages 267-280, December.
    3. Tomiura, Eiichi, 2005. "Foreign outsourcing and firm-level characteristics: Evidence from Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 255-271, June.
    4. Swenson, Deborah L., 2005. "Overseas assembly and country sourcing choices," Journal of International Economics, Elsevier, vol. 66(1), pages 107-130, May.
    5. Ludema, Rodney D. & Mayda, Anna Maria & Yu, Zhi & Yu, Miaojie, 2021. "The political economy of protection in GVCs: Evidence from Chinese micro data," Journal of International Economics, Elsevier, vol. 131(C).
    6. Witada Anukoonwattaka, 2007. "Outsourcing and International Production of a Multinational: A Theoretical Model and Empirical Evidence from Toyota, Thailand," DEGIT Conference Papers c012_045, DEGIT, Dynamics, Economic Growth, and International Trade.
    7. Alexander Hijzen & Holger Görg & Robert C. Hine, 2005. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," Economic Journal, Royal Economic Society, vol. 115(506), pages 860-878, October.
    8. Don Clark, 2006. "Country and industry-level determinants of vertical specialization-based trade," International Economic Journal, Taylor & Francis Journals, vol. 20(2), pages 211-225.
    9. Deborah L. Swenson, 2007. "Competition and the location of overseas assembly," Canadian Journal of Economics, Canadian Economics Association, vol. 40(1), pages 155-175, February.
    10. De Hoyos, Rafael E. & Iacovone, Leonardo, 2013. "Economic Performance under NAFTA: A Firm-Level Analysis of the Trade-productivity Linkages," World Development, Elsevier, vol. 44(C), pages 180-193.
    11. Kurokawa, Yoshinori, 2011. "Is a skill intensity reversal a mere theoretical curiosum? Evidence from the US and Mexico," Economics Letters, Elsevier, vol. 112(2), pages 151-154, August.
    12. Gouranga Das, 2009. "A hybrid production structure in trade: theory and implications," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 56(4), pages 359-375, December.
    13. Chiquiar Daniel & Tobal Martín, 2019. "Global Value Chains in Mexico: A Historical Perspective," Working Papers 2019-06, Banco de México.
    14. Hiau Looi Kee, 2001. "Productivity versus endowments - a study of Singapore's sectoral growth, 1974-92," Policy Research Working Paper Series 2702, The World Bank.
    15. Eldenburg, Leslie G. & Price, Richard A. & Román, Francisco J., 2019. "An exploratory study of factors affecting the longevity of manufacturing operations offshore," Accounting, Organizations and Society, Elsevier, vol. 75(C), pages 59-78.
    16. Bernard Hoekman & Alan L. Winters, 2005. "Trade and Employment: Stylized Facts and Research Findings," Working Papers 7, United Nations, Department of Economics and Social Affairs.
    17. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.

    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. Robert C. Feenstra & Gordon H. Hanson & Deborah L. Swenson, 2000. "Offshore Assembly from the United States: Production Characteristics of the 9802 Program," NBER Chapters,in: The Impact of International Trade on Wages, pages 85-125 National Bureau of Economic Research, Inc.
    2. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    3. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    4. Joseph Francois & Douglas R. Nelson, 2000. "Victims of Progress: Economic Integration, Specialization, and Wages for Unskilled Labor," Tinbergen Institute Discussion Papers 00-065/2, Tinbergen Institute.
    5. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
    6. Agnese, Pablo, 2009. "Japan and her dealings with offshoring: An empirical analysis with aggregate data," MPRA Paper 16505, University Library of Munich, Germany.
    7. Horgos, Daniel, 2009. "Labor market effects of international outsourcing: How measurement matters," International Review of Economics & Finance, Elsevier, vol. 18(4), pages 611-623, October.
    8. Shalah M. Mostashari, 2011. "Vertical specialization, intermediate tariffs, and the pattern of trade: assessing the role of tariff liberalization to U.S. bilateral trade 1989-2001," Globalization Institute Working Papers 71, Federal Reserve Bank of Dallas.
    9. Paolo Epifani & Gino Gancia, 2008. "The Skill Bias of World Trade," Economic Journal, Royal Economic Society, vol. 118(530), pages 927-960, July.
    10. Jauhari, Azmafazilah Binti & khalifah, noor, 2018. "Trade Linkages and Skill Demand: Empirical Evidence for the Malaysian Electrical and Electronics Industries," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(1), pages 89-103.
    11. Kemal Türkcan, 2011. "Vertical Intra-Industry Trade and Product Fragmentation in the Auto-Parts Industry," Journal of Industry, Competition and Trade, Springer, vol. 11(2), pages 149-186, June.
    12. Nahuis, R., 1997. "On Globalisation, Trade and Wages," Research Memorandum 747, Tilburg University, School of Economics and Management.
    13. Agnese, Pablo & Ricart, Joan E., 2009. "Offshoring: Facts and figures at the country level," IESE Research Papers D/792, IESE Business School.
    14. Katharina Längle, 2020. "Offshoring: What Consequences for Workers? Evidence from Global Value Chains," Documents de travail du Centre d'Economie de la Sorbonne 20005, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    15. Arti Grover, 2005. "Outsourcing Versus Foreign Direct Investment--A Welfare Analysis," Working papers 140, Centre for Development Economics, Delhi School of Economics.
    16. Michael C. Burda & Barbara Dluhosch, 2002. "Fragmentation, Globalisation and Labour Markets," International Economic Association Series, in: David Greenaway & Richard Upward & Katharine Wakelin (ed.), Trade, Investment, Migration and Labour Market Adjustment, chapter 4, pages 47-65, Palgrave Macmillan.
    17. Katharina Längle, 2020. "Offshoring: What Consequences for Workers? Evidence from Global Value Chains," Working Papers hal-02548691, HAL.
    18. Hartmut Egger & Josef Falkinger, 2003. "The Role of Public Infrastructure for Firm Location and International Outsourcing," CESifo Working Paper Series 970, CESifo.
    19. Wilhelm Kohler, 2002. "The Distributional Effects of International Fragmentation," Economics working papers 2002_01, Department of Economics, Johannes Kepler University Linz, Austria.
    20. Agnese, Pablo & Joan Enric, Ricart, 2009. "Offshoring: Facts and numbers at the country level," MPRA Paper 16503, University Library of Munich, Germany.

    More about this item

    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:cda:wpaper:322. 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: Letters and Science IT Services Unit (email available below). General contact details of provider: https://edirc.repec.org/data/educdus.html .

    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.