Does Material and Service Offshoring Improve Domestic Productivity? Evidence from Japanese manufacturing industries
AbstractAn increasing number of manufacturers are shifting some stages of the production process offshore. This study investigates the effects of offshoring on productivity in Japanese manufacturing industries for the period 1988-2004. Material offshoring, as measured by an import share of intermediate material inputs, has steadily increased during the period, with a pronounced increase in offshoring to Asian countries. In a wide range of specifications, we find significantly positive correlations between material offshoring and productivity at the industry level. The estimates are particularly robust for offshoring to Asia. These results suggest that Japanese manufacturing firms have developed an extensive international division of labor in East Asia, which in turn may have enhanced domestic productivity. In contrast, service offshoring, as measured by an import ratio of service inputs, is not associated with industry-level productivity. We find a positive correlation between offshoring and productivity only for information services, suggesting that in this segment, offshoring offers potential benefits.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 10010.
Length: 42 pages
Date of creation: Feb 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-13 (All new papers)
- NEP-EFF-2010-03-13 (Efficiency & Productivity)
- NEP-INT-2010-03-13 (International Trade)
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- KWON Hyeog Ug, 2012. "Offshoring of Japanese Small and Medium Enterprises (Japanese)," Discussion Papers (Japanese) 12004, Research Institute of Economy, Trade and Industry (RIETI).
- Agnese, Pablo, 2013. "Offshoring and Productivity Revisited: A Time-Series Analysis," IZA Discussion Papers 7323, Institute for the Study of Labor (IZA).
- Pablo Agnese, 2013.
"Offshoring and productivity revisited: A Time-Series Analysis
[Zur Debatte um Offshoring und Produktivität: Eine Zeitreihenanalyse]," Duesseldorf Working Papers in Applied Management and Economics fobe23, Duesseldorf University of Applied Sciences.
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