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On Offshoring and Trade Deficit

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  • Hamid Beladi
  • Reza Oladi

Abstract

The paper constructs a general equilibrium model of North–South trade with nontraded goods, real exchange rate, and a continuum of components that North partly offshores to South. It is shown that a protectionary policy which restricts offshoring may have the unintended consequence of widening the trade deficit.

Suggested Citation

  • Hamid Beladi & Reza Oladi, 2014. "On Offshoring and Trade Deficit," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 517-523, August.
    • Handle: RePEc:bla:rdevec:v:18:y:2014:i:3:p:517-523
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    File URL: http://hdl.handle.net/10.1111/rode.12100
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    References listed on IDEAS

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    1. Bakhtiari, Sasan, 2012. "Offshoring, wages and the growing skill gap: Advocating offshoring without sectoral reallocation," International Review of Economics & Finance, Elsevier, vol. 23(C), pages 46-58.
    2. Beladi, Hamid & Oladi, Reza, 2011. "An elementary proposition on technical progress and non-traded goods," Journal of Mathematical Economics, Elsevier, vol. 47(1), pages 68-71, January.
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    8. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    9. Goswami, Arti Grover, 2013. "Vertical FDI versus outsourcing: The role of technology transfer costs," The North American Journal of Economics and Finance, Elsevier, vol. 25(C), pages 1-21.
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    11. Mukherjee, Arijit & Tsai, Yingyi, 2013. "Multi-sourcing as an entry deterrence strategy," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 108-112.
    12. Jones, Ronald W., 2005. "Immigration vs. outsourcing: Effects on labor markets," International Review of Economics & Finance, Elsevier, vol. 14(2), pages 105-114.
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    14. Reza Oladi & Hamid Beladi, 2008. "Non-traded Goods, Technical Progress and Wages," Open Economies Review, Springer, vol. 19(4), pages 507-515, September.
    15. Reza Oladi & Hamid Beladi & John Gilbert, 2014. "A Strategic Approach to Offshoring," Economics and Politics, Wiley Blackwell, vol. 26(1), pages 1-12, March.
    16. Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2011. "North–South Outsourcing, Immigration, and Skilled Wages: Through the Lens of Incomplete Contracts," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 417-428, August.
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    Cited by:

    1. Choi, Yoonho & Choi, E. Kwan, 2018. "Unemployment and optimal exchange rate in an open economy," Economic Modelling, Elsevier, vol. 69(C), pages 82-90.
    2. Jin, Hailong & Choi, Yoonho & Kwan Choi, E., 2016. "Unemployment and optimal currency intervention in an open economy," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 253-261.

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