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Make or Buy: Offshoring of Services Functions in Manufacturing

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  • Hildegunn Kyvik Nordås

    (Norwegian Institute of International Affairs (NUPI)
    Örebro University)

Abstract

About 40% of employment in manufacturing is in services functions. This paper develops a measure of narrow outsourcing: the matching of services functions that are performed by workers who are inside manufacturing firms to the same services functions that are provided by outside suppliers. Narrow outsourcing is entered into labour demand functions where labour is classified by business functions. The impact of narrow offshoring on manufacturing labour demand is small on average but depends strongly on the complexity of the value chain, the policy environment, and ICT maturity. The IT and R&D functions are most sensitive to offshoring.

Suggested Citation

  • Hildegunn Kyvik Nordås, 2020. "Make or Buy: Offshoring of Services Functions in Manufacturing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(2), pages 351-378, September.
    • Handle: RePEc:kap:revind:v:57:y:2020:i:2:d:10.1007_s11151-020-09771-1
    DOI: 10.1007/s11151-020-09771-1
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    More about this item

    Keywords

    Labour demand; Offshoring; Outsourcing; Regulation; Structural changes; Technology;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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