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The Changing Firm and Country Boundaries of US Manufacturers in Global Value Chains

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  • Teresa C. Fort

Abstract

This paper documents how US firms organize goods production across firm and country boundaries. Most US firms that perform physical transformation tasks in-house using foreign manufacturing plants in 2007 also own US manufacturing plants; moreover manufacturing comprises their main domestic activity. By contrast, “factoryless goods producers” outsource all physical transformation tasks to arm's-length contractors, focusing their in-house efforts on design and marketing. This distinct firm type is missing from standard analyses of manufacturing, growing in importance, and increasingly reliant on foreign suppliers. Physical transformation “within-the-firm” thus coincides with substantial physical transformation “within-the-country,” whereas its performance “outside-the-firm” often also implies “outside-the-country.” Despite these differences, factoryless goods producers and firms with foreign and domestic manufacturing plants both employ relatively high shares of US knowledge workers. These patterns call for new models and data to capture the potential for foreign production to support domestic innovation, which US firms leverage around the world.

Suggested Citation

  • Teresa C. Fort, 2023. "The Changing Firm and Country Boundaries of US Manufacturers in Global Value Chains," NBER Working Papers 31319, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:31319
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    Cited by:

    1. Richard Baldwin & Rebecca Freeman & Angelos Theodorakopoulos, 2023. "Hidden Exposure: Measuring US Supply Chain Reliance," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 54(2 (Fall)), pages 79-167.
    2. Jaerim Choi & Masahiro Endoh & Akira Sasahara, 2024. "A Tale of Two Countries: Global Value Chains, the China Trade Shock, and Labor Markets," Keio-IES Discussion Paper Series 2024-012, Institute for Economics Studies, Keio University.
    3. Burks, Stephen V. & Kildegaard, Arne & Miller, Jason W. & Monaco, Kristen, 2023. "When Is High Turnover Cheaper? A Simple Model of Cost Tradeoffs in a Long‐Distance Truckload Motor Carrier, with Empirical Evidence and Policy Implications," IZA Discussion Papers 16477, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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