Does ICT Investment Spur or Hamper Offshoring? Empirical Evidence from Microdata
Abstract
In this paper we provide empirical evidence on the effect of ICT investment on the propensity to offshore for a large sample of Italian manufacturing firms. Contrary to previous literature focusing on the service sector, after taking into account the endogeneity of ICT investment in the offshoring decision equation we find a negative and significant effect of ICT on the propensity to offshore some stages of the production process. Furthermore this effect turns out not to depend on the type of ICT investment and applies both to hardware and software/telecommunication expenditures. A potential explanation for our finding is that ICT investments in manufacturing increase the complementarity of production processes within the firm, thereby reducing the incentive to offshore. Our results seem therefore to suggest that negative exogenous shocks to ICT prices–possibly induced by targeted policy programs aimed at the diffusion of ICT technologies–do not favor offshoring of manufacturing activities.Download Info
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Paper provided by Former Department of Economics and Public Finance "G. Prato", University of Torino in its series Working papers with number 5.Length: 35 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:tur:wpaper:5
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Keywords: ICT Investment; Offshoring; Maximum Likelihood System Estimation;Other versions of this item:
- Luigi Benfratello & Tiziano Razzolini & Alessandro Sembenelli, 2009. "Does ICT Investment Spur or Hamper Offshoring? Empirical Evidence from Microdata," Development Working Papers 276, Centro Studi Luca d\'Agliano, University of Milano.
- C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- F20 - International Economics - - International Factor Movements and International Business - - - General
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-03 (All new papers)
- NEP-ICT-2009-07-03 (Information & Communication Technologies)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Andrea F. Presbitero & Matteo G. Richiardi & Alessia Amighini, 2012.
"Is labor flexibility a substitute to offshoring? Evidence from Italian manafacturing,"
LABORatorio R. Revelli Working Papers Series
122, LABORatorio R. Revelli, Centre for Employment Studies.
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