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Can we really trust offshoring indices?

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Author Info

  • Davide, Castellani

    ()
    (University of Perugia)

  • De Benedictis, Luca

    ()
    (University of Macerata)

  • Horgos, Daniel

    ()
    (Helmut Schmidt University, Hamburg)

Abstract

This paper argues that indices of (business) service and material offshoring built on sectoral input-output data may actually measure something different than what we think they should. Applying shift-share analysis we decompose the variation over time of a commonly used class of such indices into two components: one related to the intensity in the import of intermediate inputs, and the other associated with the use of such inputs in the production of manufacturing goods. Using data from input-output tables of 21 European countries from 1995 to 2006, we show that in the case of service offshoring, in most countries a larger part of the variance is driven by the raising share of (domestically produced) services used in manufacturing production, while the share of imported services contributes to a much smaller extent. When we focus on the subset of business services, evidence shows a relatively larger tendency towards relying on imported rather domestically produced inputs. Instead, in the case of material offshoring there is evidence that foreign suppliers have substituted domestic ones. However, this pattern is strongest in countries, such as Estonia, Hungary and Slovenia, where incoming multinationals, rather than domestic firms offshoring production may be the driving force.

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Bibliographic Info

Paper provided by Helmut Schmidt University, Hamburg in its series Working Paper with number 114/2011.

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Length: 22 pages
Date of creation: 20 Jun 2011
Date of revision: 21 Jun 2011
Handle: RePEc:ris:vhsuwp:2011_114

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Keywords: outsourcing; import penetration; offshoring; index; measurement;

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References

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Citations

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Cited by:
  1. Tillmann Schwörer, 2012. "Offshoring, Domestic Outsourcing, and Productivity: Evidence for a Number of European Countries," Kiel Working Papers 1786, Kiel Institute for the World Economy.
  2. Tillmann Schwörer, 2013. "Offshoring, domestic outsourcing and productivity: evidence for a number of European countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(1), pages 131-149, March.
  3. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.

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