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Financialisation and the dynamics of offshoring in the USA

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  • William Milberg
  • Deborah Winkler

Abstract

Imports are linked to higher cost mark-ups and firm profits, and the gains from such non-competitive imports--the result of offshoring--are increasingly associated with the reinvestment of these higher profits. Our regression analysis of 35 US manufacturing and service industries over the period 1998--2006 supports aggregate and firm-level studies showing that offshoring is associated with a higher share of corporate profit in total value added. But the 'dynamic' gains from offshoring have not been fully realised because firms have purchased financial assets--especially share buybacks and higher dividend payments--to raise shareholder value, rather than investing in productive assets that raise productivity, growth, employment and income. Despite the corporate sector's contribution to national savings over the past decade, the offshoring--financialisation linkage reduces the capacity of non-financial corporations to act as a driver of the recovery from the economic crisis that emerged in 2008. Copyright The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Cambridge Journal of Economics.

Volume (Year): 34 (2010)
Issue (Month): 2 (March)
Pages: 275-293

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Handle: RePEc:oup:cambje:v:34:y:2010:i:2:p:275-293

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Cited by:
  1. Engelbert Stockhammer, 2010. "Financialization and the Global Economy," Working Papers wp240, Political Economy Research Institute, University of Massachusetts at Amherst.
  2. Deepankar Basu & Duncan K. Foley, 2013. "Dynamics of output and employment in the US economy," Cambridge Journal of Economics, Oxford University Press, vol. 37(5), pages 1077-1106.
  3. Marika Karanassou & Hector Sala, 2011. "Inequality and Employment Sensitivities to the Falling Labour Share," Working Papers 680, Queen Mary, University of London, School of Economics and Finance.
  4. Jan Toporowski, 2012. "Neologism as Theoretical Innovation in Economics: The case of 'Financialisation'," Working Papers 171, Department of Economics, SOAS, University of London, UK.
  5. Russo, Alberto, 2012. "Elements of novelty, known mechanisms, and the fundamental causes of the recent crisis," MPRA Paper 41088, University Library of Munich, Germany.
  6. Bernard Hoekman & Ben Shepherd, 2013. "Who Profits From Trade Facilitation Initiatives?," RSCAS Working Papers 2013/49, European University Institute.
  7. Arestis, P. & Singh, A., 2010. "Financial Globalisation and Crisis, Institutional Transformation and Equity," ESRC Centre for Business Research - Working Papers wp405, ESRC Centre for Business Research.
  8. Dev Nathan & Sandip Sarkar, 2012. "Global inequality, rising powers and labour standards," Brooks World Poverty Institute Working Paper Series ctg-2012-09, BWPI, The University of Manchester.
  9. Russo, Alberto & Zanini, Adelino, 2010. "On the expansion of finance and financialisation," MPRA Paper 26828, University Library of Munich, Germany.
  10. Marika Karanassou & Hector Sala, 2012. "Distributional Consequences of Capital Accumulation, Globalisation and Financialisation in the US," Working Papers 695, Queen Mary, University of London, School of Economics and Finance.
  11. Ioannis Bournakis & Michela Vecchi & Francesco Venturini, 2011. "Offshoring and Specialisation: Are Industries Moving Abroad?," Quaderni del Dipartimento di Economia, Finanza e Statistica 98/2011, Università di Perugia, Dipartimento Economia, Finanza e Statistica.
  12. Robert A. Blecker, 2012. "Stolper-Samuelson Revisited: Trade and Distribution with Oligopolistic Profits," Working Papers 2012-06, American University, Department of Economics.
  13. Michalis Nikiforos, 2013. "Employment Recovery? after the Great Recession," Economics Policy Note Archive 13-03, Levy Economics Institute.
  14. Dünhaupt, Petra, 2013. "Determinants of functional income distribution : theory and empirical evidence," ILO Working Papers 484122, International Labour Organization.

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