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Evaluating estimates of materials offshoring from US manufacturing

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  • Feenstra, Robert C.
  • Jensen, J. Bradford

Abstract

When materials offshoring is measured by estimating imported intermediate inputs, a common assumption used is that an industry’s imports of each input, relative to its total demand, is the same as the economy-wide imports relative to total demand: this is the so-called “import comparability” or “proportionality” assumption. A report to the National Research Council identified this assumption as being a significant limitation of current data collection and analysis. In this note we move beyond this assumption to obtain a direct measure of imported materials by industry for the United States in 1997. At the 3-digit I–O industry level, there is a correlation of 0.68 between the offshoring shares made with and without the proportionality assumption, and a higher correlation of 0.87 when the shares are value weighted. While most value-weighted industries have differences below 50 percentage points in the two estimates, there are a significant number of cases that differ by 10 percentage points or more.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 117 (2012)
Issue (Month): 1 ()
Pages: 170-173

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Handle: RePEc:eee:ecolet:v:117:y:2012:i:1:p:170-173

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Web page: http://www.elsevier.com/locate/ecolet

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Keywords: Offshoring; Proportionality; Import comparability;

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References

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  1. Robert C. Feenstra & J. Bradford Jensen, 2012. "Evaluating Estimates of Materials Offshoring from U.S. Manufacturing," NBER Working Papers 17916, National Bureau of Economic Research, Inc.
  2. Puzzello, Laura, 2012. "A proportionality assumption and measurement biases in the factor content of trade," Journal of International Economics, Elsevier, Elsevier, vol. 87(1), pages 105-111.
  3. J. Bradford Jensen & Andrew Bernard & Peter Schott, 2005. "Importers, Exporters, and Multinationals: A Portrait of Firms in the U.S. that Trade Goods," Working Papers 05-20, Center for Economic Studies, U.S. Census Bureau.
  4. Deborah Winkler, William Milberg, 2009. "WP 2009-12 Errors from the “Proportionality Assumption” in the Measurement of Offshoring: Application to German Labor Demand," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2009-12, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  5. Susan Houseman & Christopher Kurz & Paul Lengermann & Benjamin Mandel, 2011. "Offshoring Bias in U.S. Manufacturing," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 111-32, Spring.
  6. Robert C. Feenstra & John Romalis & Peter K. Schott, 2002. "U.S. Imports, Exports, and Tariff Data, 1989-2001," NBER Working Papers 9387, National Bureau of Economic Research, Inc.
  7. Robert C. Feenstra, 1996. "U.S. Imports, 1972-1994: Data and Concordances," NBER Working Papers 5515, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2012. "Offshoring and Directed Technical Change," NBER Working Papers 18595, National Bureau of Economic Research, Inc.
  2. Feenstra, Robert C. & Jensen, J. Bradford, 2012. "Evaluating estimates of materials offshoring from US manufacturing," Economics Letters, Elsevier, Elsevier, vol. 117(1), pages 170-173.
  3. Tillmann Schwörer, 2012. "Offshoring, Domestic Outsourcing, and Productivity: Evidence for a Number of European Countries," Kiel Working Papers 1786, Kiel Institute for the World Economy.
  4. Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2010. "Give Credit Where Credit Is Due: Tracing Value Added in Global Production Chains," NBER Working Papers 16426, National Bureau of Economic Research, Inc.
  5. Basco, Sergi, 2013. "Financial development and the product cycle," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 94(C), pages 295-313.
  6. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers, Banco de Portugal, Economics and Research Department w201403, Banco de Portugal, Economics and Research Department.
  7. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2012. "Tracing Value-added and Double Counting in Gross Exports," NBER Working Papers 18579, National Bureau of Economic Research, Inc.
  8. Tillmann Schwörer, 2013. "Offshoring, domestic outsourcing and productivity: evidence for a number of European countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 149(1), pages 131-149, March.
  9. Timmer, Marcel P. & Los, Bart & Stehrer, Robert & de Vries, Gaaitzen, 2013. "Fragmentation, incomes and jobs: an analysis of European competitiveness," Working Paper Series, European Central Bank 1615, European Central Bank.
  10. Davide, Castellani & De Benedictis, Luca & Horgos, Daniel, 2011. "Can we really trust offshoring indices?," Working Paper 114/2011, Helmut Schmidt University, Hamburg, revised 21 Jun 2011.
  11. Warda, Peter, 2013. "Labor Decomposition: A Firm Level Analysis on Import Quality and Labor Demand," Working Paper Series in Economics and Institutions of Innovation, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies 322, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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