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No plant, no problem? Factoryless manufacturing and economic measurement

Author

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  • Diane Coyle
  • David Nguyen

Abstract

Factoryless manufacturing’ describes the strategic decision by businesses to outsource part or all of their production to a sub-contractor, sometimes overseas. Although it seems to be widespread in some sectors of manufacturing, the phenomenon is not captured by existing economic statistics. Failure to measure its extent implies there may be misattribution of production activity across sectors and countries. In particular, the decline of manufacturing could be somewhat overstated. We present web-scraped evidence on the extent of factoryless manufacturing in the UK, finding that firms in sectors such as chemicals and pharmaceuticals are more often involved in contract manufacturing, whereas in the US it is more prevalent within electronics. We also present case studies on UK automotive and pharmaceuticals based on systematic analysis of annual reports and websites. Given the sector-based focus of many economic policies, these findings point to the need for consistent measurement of factoryless manufacturing through official surveys.

Suggested Citation

  • Diane Coyle & David Nguyen, 2019. "No plant, no problem? Factoryless manufacturing and economic measurement," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2019-15, Economic Statistics Centre of Excellence (ESCoE).
    • Handle: RePEc:nsr:escoed:escoe-dp-2019-15
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    Cited by:

    1. Josh Martin & Rebecca Riley, 2023. "Productivity measurement - Reassessing the production function from micro to macro," Working Papers 033, The Productivity Institute.

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    More about this item

    Keywords

    factoryless manufacturing; contract manufacturing; economic measurement; web scraping;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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