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Institutions and Offshoring Decision

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  • Marcella Nicolini

Abstract

Several papers have proven that the institutional environment of the receiving country can influence the choice to establish an FDI. Property rights theory suggests that contract enforcement matters differentially across sectors. This paper is the first attempt to test whether institutions matter differentially across different sectors in FDI decision. Using data on U.S. Direct Investment Abroad, I find that institutional characteristics of the country and the industry positively affect the volume of offshoring between U.S. companies and their affiliates. The suggested argument is stronger for the intermediate products, while the evidence is weak for products ready for sale.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2074.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_2074

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Cited by:
  1. Bas, Maria & Ledezma, Ivan, 2007. "Market Access and the Evolution of within Plant Productivity in Chile," Economics Papers from University Paris Dauphine 123456789/6913, Paris Dauphine University.
  2. Püschel, Julia, 2012. "Task dependence of U.S. service offshoring patterns," Discussion Papers 2012/15, Free University Berlin, School of Business & Economics.

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