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Incomplete specialization and offshoring across Europe

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  • Richard Frensch

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  • Jan Hanousek
  • Evžen Kočenda

Abstract

Research for evidence on offshoring activities and its driving forces has been done by analyzing gross trade flows related to offshoring using gravity equations augmented by ad hoc measures of supply-side country differences. We develop a specification grounded in incomplete specialization that views bilateral gravity equations as statistical relationships constrained on countries’ multilateral specialization patterns. We apply this approach to an empirical analysis of the European trade in parts and components. Our results bring evidence that bilateral trade related to offshoring activities across Europe is driven by countries’ multilateral specialization incentives that are expressed by specific supply-side country differences relative to the rest of the world.

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Bibliographic Info

Paper provided by Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies) in its series Working Papers with number 321.

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Length: 38
Date of creation: Sep 2012
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Handle: RePEc:ost:wpaper:321

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Keywords: International trade; gravity model; offshoring; panel data; European Union;

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Cited by:
  1. Richard Frensch & Jan Hanousek & Evžen Kočenda, 2012. "Specialization, gravity, and European trade in final goods," Working Papers 320, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).

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