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Overseas Assembly and Country Sourcing Choices

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  • Deborah L. Swenson

Abstract

This paper studies the cross-country pattern of U.S. overseas assembly activities between 1980 and 2000 to examine how outsourcing decisions are affected by changes in country and competitor costs. A number of interesting regularities emerge. When a country's costs rise, the share of U.S. overseas assembly activities in that location decline. Conversely, a country's share of U.S. overseas assembly activities grows when competitor country costs increase. While own and competitor country costs affect overseas assembly in all countries, the magnitude of these effects is larger for developing countries than it is for developed countries. In many cases, the measured responses to cost changes appear to correspond with outsourcing theories that are based on search and customization costs.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10697.

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Date of creation: Aug 2004
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Publication status: published as Swenson, Deborah L. "Overseas Assembly And Country Sourcing Choices," Journal of International Economics, 2005, v66(1,May), 107-130.
Handle: RePEc:nbr:nberwo:10697

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Citations

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Cited by:
  1. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
  2. Deborah L. Swenson, 2007. "Competition and the location of overseas assembly," Canadian Journal of Economics, Canadian Economics Association, vol. 40(1), pages 155-175, February.
  3. João Amador & Sónia Cabral, 2008. "International Fragmentation of Production in the Portuguese Economy: What do Different Measures Tell Us?," Working Papers w200811, Banco de Portugal, Economics and Research Department.
  4. Ekholm, Karolina & Moxnes, Andreas & Ulltveit-Moe, Karen-Helene, 2008. "Manufacturing restructuring and the role of Real exchange rate shocks: A firm level analysis," CEPR Discussion Papers 6904, C.E.P.R. Discussion Papers.
  5. Mine Zeynep Senses, 2006. "The Effects of Outsourcing on the Elasticity of Labor Demand," Working Papers 06-07, Center for Economic Studies, U.S. Census Bureau.
  6. Emek Basker & Pham Hoang Van, 2005. "Putting a Smiley Face on the Dragon: Wal-Mart as Catalyst to U.S.-China Trade," Working Papers 0506, Department of Economics, University of Missouri, revised 07 Oct 2005.
  7. Yushi Yoshida, 2005. "Outsourcing of Intermediate Manufacturing Products in Asian Economies," Discussion Papers 21, Kyushu Sangyo University, Faculty of Economics.
  8. Deborah Swenson, 2005. "Outsourcing Price Decisions: Evidence from U.S. 9802 Imports," NBER Working Papers 11184, National Bureau of Economic Research, Inc.
  9. Amador, João & Cabral, Sónia, 2009. "Vertical specialization across the world: A relative measure," The North American Journal of Economics and Finance, Elsevier, vol. 20(3), pages 267-280, December.
  10. Amit Ghosh, 2009. "Implications of production sharing on exchange rate pass-through," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 14(4), pages 334-345.
  11. Witada Anukoonwattaka, 2011. "Comparative overview of economic profiles and roles of China and India in Asian international production networks," STUDIES IN TRADE AND INVESTMENT, in: India: A New Player in Asian Production Networks?, Studies in Trade and Investment 75, chapter 2, pages 23-53 United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  12. Tavassoli, Sam & Kianian, Babak & Larsson, Tobias C., 2013. "Manufacturing Renaissance: Return of manufacturing to western countries," CITR Working Paper Series 2013/04, Center for Innovation and Technology Research, Blekinge Institute of Technology.
  13. Shalah Mostashari, 2011. "Vertical specialization, intermediate tariffs, and the pattern of trade: assessing the role of tariff liberalization to U.S. bilateral trade 1989-2001," Globalization and Monetary Policy Institute Working Paper 71, Federal Reserve Bank of Dallas.
  14. Yamashita, Nobuaki, 2011. "Production sharing and trade flows: A comparative analysis of Japan and the US," Journal of Asian Economics, Elsevier, vol. 22(5), pages 383-397, October.
  15. Rosa Forte & António Brandão, 2008. "Effects of Adverse Selection on a Multinational Firm’s Decision on where to Subcontract," Journal of Industry, Competition and Trade, Springer, vol. 8(2), pages 133-146, June.
  16. Olivier Sautel, 2007. "L'évolution de la théorie des contrats incomplets face à la dé-intégration verticale," Revue d'économie industrielle, De Boeck Université, vol. 0(1), pages 5-5.
  17. Díez, Federico J., 2014. "The asymmetric effects of tariffs on intra-firm trade and offshoring decisions," Journal of International Economics, Elsevier, vol. 93(1), pages 76-91.
  18. Witada Anukoonwattaka, 2007. "Outsourcing and International Production of a Multinational: A Theoretical Model and Empirical Evidence from Toyota, Thailand," DEGIT Conference Papers c012_045, DEGIT, Dynamics, Economic Growth, and International Trade.
  19. Marcella Nicolini, 2007. "Institutions and Offshoring Decision," CESifo Working Paper Series 2074, CESifo Group Munich.

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