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Overseas Assembly Production Choices

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  • DEBORAH L. SWENSON

Abstract

This article examines the input choices for producers who assemble their goods abroad and imported them to the United States through the U.S. Overseas Assembly Provisions. Three findings emerge. First, firms reduce their use of foreign parts and assembly when foreign costs rise, but only with a lag. In contrast, recent foreign cost increases boost the foreign portion of final product value. Second, the effects of cost changes are more pronounced for U.S. outsourcing imports from developing countries. Finally, the degree of production responsiveness differs with industry capital intensity and is the greatest for low‐capital intensity projects performed in non‐Organization for Economic Cooperation and Development (OECD) locations.

Suggested Citation

  • Deborah L. Swenson, 2005. "Overseas Assembly Production Choices," Contemporary Economic Policy, Western Economic Association International, vol. 23(3), pages 394-403, July.
    • Handle: RePEc:bla:coecpo:v:23:y:2005:i:3:p:394-403
    DOI: 10.1093/cep/byi029
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    References listed on IDEAS

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    Cited by:

    1. Thomas Hutzschenreuter & Florian Gröne, 2009. "Changing Vertical Integration Strategies under Pressure from Foreign Competition: The Case of US and German Multinationals," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 269-307, March.

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