IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/17911.html
   My bibliography  Save this paper

The Determinants of Outsourcing from the U. S.: Evidence from Domestic Manufacturing Industries, 1972-2002

Author

Listed:
  • Maxim, Belenkiy

Abstract

The issue of outsourcing as a form of foreign direct investment (FDI) has been widely discussed in the recent past. In this essay, I analyze what determines the outsourcing activity by looking at U. S. manufacturing industries between 1972 and 2002. I concentrate on correlation between the measure of outsourcing and wages, bargaining coverage contracts, transportation costs, and private gross fixed investment in information technology. My analysis finds differences in the effects of wages on outsourcing activity depending on the type of industry (i.e., whether the industry produces durable or non-durable goods). The main regression model finds that wages and union coverage cannot fully explain the colossal increase in outsourcing activity in the last three decades. Rather, the primary factors influencing the increase in outsourcing are likely to be the growth in foreign productivity and technological changes that allow more international specialization in the intermediate production stages of the final good.

Suggested Citation

  • Maxim, Belenkiy, 2005. "The Determinants of Outsourcing from the U. S.: Evidence from Domestic Manufacturing Industries, 1972-2002," MPRA Paper 17911, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:17911
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/17911/1/MPRA_paper_17911.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert E. Lipsey, 1995. "Outward Direct Investment and the U.S. Economy," NBER Chapters, in: The Effects of Taxation on Multinational Corporations, pages 7-42, National Bureau of Economic Research, Inc.
    2. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
    3. Gene M. Grossman & Elhanan Helpman, 2005. "Outsourcing in a Global Economy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 135-159.
    4. Gust, Christopher & Marquez, Jaime, 2004. "International comparisons of productivity growth: the role of information technology and regulatory practices," Labour Economics, Elsevier, vol. 11(1), pages 33-58, February.
    5. repec:pri:wwseco:dp218 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    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. Roberto M. Samaniego, 2006. "Employment Protection and High-Tech Aversion," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(2), pages 224-241, April.
    2. Marcella Nicolini, 2007. "Institutions and Offshoring Decision," CESifo Working Paper Series 2074, CESifo.
    3. Fernandes, Ana P. & Tang, Heiwai, 2012. "Determinants of vertical integration in export processing: Theory and evidence from China," Journal of Development Economics, Elsevier, vol. 99(2), pages 396-414.
    4. Deborah L. Swenson, 2005. "Overseas Assembly Production Choices," Contemporary Economic Policy, Western Economic Association International, vol. 23(3), pages 394-403, July.
    5. Nathan Nunn, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(2), pages 569-600.
    6. Stefano Federico, 2010. "Outsourcing versus Integration at Home or Abroad," Temi di discussione (Economic working papers) 742, Bank of Italy, Economic Research and International Relations Area.
    7. 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.
    8. Spiros Bougheas & Holger Görg, 2008. "Organizational Forms for Global Engagement of Firms," Discussion Papers 08/33, University of Nottingham, GEP.
    9. Hamid Beladi & Reza Oladi, 2014. "On Offshoring and Trade Deficit," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 517-523, August.
    10. Miguel Jimenez & Domenico Marchetti, 2002. "Interpreting the procyclical productivity of manufacturing sectors: can we really rule out external effects?," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 805-817.
    11. repec:lic:licosd:18407 is not listed on IDEAS
    12. P. Guerrieri & M. Luciani & V. Meliciani, 2011. "The determinants of investment in information and communication technologies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(4), pages 387-403.
    13. Robert C. Feenstra & Gordon H. Hanson, "undated". "Productivity Measurement And The Impact Of Trade And Technology On Wages: Estimates For The U.S., 1972-1990," Department of Economics 97-17, California Davis - Department of Economics.
    14. Chang, Yongsung & Hornstein, Andreas & Sarte, Pierre-Daniel, 2009. "On the employment effects of productivity shocks: The role of inventories, demand elasticity, and sticky prices," Journal of Monetary Economics, Elsevier, vol. 56(3), pages 328-343, April.
    15. Lommerud, Kjell Erik & Meland, Frode & Straume, Odd Rune, 2009. "Can deunionization lead to international outsourcing?," Journal of International Economics, Elsevier, vol. 77(1), pages 109-119, February.
    16. Cardullo, Gabriele & Conti, Maurizio & Sulis, Giovanni, 2015. "Sunk capital, unions and the hold-up problem: Theory and evidence from cross-country sectoral data," European Economic Review, Elsevier, vol. 76(C), pages 253-274.
    17. Elstner, Steffen & Grimme, Christian & Kecht, Valentin & Lehmann, Robert, 2022. "The diffusion of technological progress in ICT," European Economic Review, Elsevier, vol. 149(C).
    18. Crafts, Nicholas & Toniolo, Gianni, 2008. "European Economic Growth, 1950-2005: An Overview," CEPR Discussion Papers 6863, C.E.P.R. Discussion Papers.
    19. Petroulas, Pavlos, 2007. "The effect of the euro on foreign direct investment," European Economic Review, Elsevier, vol. 51(6), pages 1468-1491, August.
    20. Andrei A Levchenko & Jing Zhang, 2013. "The Global Labor Market Impact of Emerging Giants: A Quantitative Assessment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(3), pages 479-519, August.
    21. Nicholas Bloom & John Van Reenen, 2007. "Measuring and Explaining Management Practices Across Firms and Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1351-1408.

    More about this item

    Keywords

    Outsourcing; Estimation;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F1 - International Economics - - Trade
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

    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:pra:mprapa:17911. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.