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Greasing the wheels of international commerce: how services facilitate firms' international sourcing

Author

Listed:
  • Peter Debaere
  • Holger Görg
  • Horst Raff

Abstract

We use plant-level data to study the link between the local availability of services and the decision of manufacturing firms to source materials from abroad. We develop a model to generate predictions about how the intensity of international sourcing of materials depends on the availability of services and firm characteristics. These predictions are supported by the data. Greater availability of services across regions, industries, and time increases firms' foreign sourcing of materials relative to sales. The impact of services differs by firm type. National firms' sourcing responds to changes in regional service conditions, whereas multinationals tend to be less affected.

Suggested Citation

  • Peter Debaere & Holger Görg & Horst Raff, 2013. "Greasing the wheels of international commerce: how services facilitate firms' international sourcing," Canadian Journal of Economics, Canadian Economics Association, vol. 46(1), pages 78-102, February.
    • Handle: RePEc:cje:issued:v:46:y:2013:i:1:p:78-102
    DOI: 10.1111/caje.12006
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    Cited by:

    1. Pisch, Frank & Berlingieri, Giuseppe, 2022. "Managing Export Complexity: The Role of Service Outsourcing," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 135680, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    2. Ha Nguyen & Shawheen Rezaei & Divya Agarwal, 2022. "The great recession and job loss spillovers: impact of tradable employment shocks on supporting services," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(3), pages 789-815, June.
    3. Amador, João & Cabral, Sónia, 2014. "Global value chains: surveying drivers and measures," Working Paper Series 1739, European Central Bank.
    4. Holger Görg & Liza Jabbour, 2016. "Availability of Business Services and Outward Investment: Evidence from French Firms," Review of International Economics, Wiley Blackwell, vol. 24(4), pages 797-819, September.
    5. Fauziah Zen & Lili Yan Ing & Pyan Amin Muchtar & Muhammad Raihan Ramadhan & Sebastian Benz & Charles Christmann & Matteo Fiorini & Alexander Jaax, 2023. "Financial Services Trade Liberalisation in Indonesia: Policy Patterns and Economic Linkages," Books, Economic Research Institute for ASEAN and East Asia (ERIA), number 2023-RPR-21 edited by Fauziah Zen & Lili Yan Ing & Matteo Fiorini, April.
    6. Markus Kelle, 2013. "Crossing Industry Borders: German Manufacturers as Services Exporters," The World Economy, Wiley Blackwell, vol. 36(12), pages 1494-1515, December.
    7. Bernard Hoekman & Ben Shepherd, 2017. "Services Productivity, Trade Policy and Manufacturing Exports," The World Economy, Wiley Blackwell, vol. 40(3), pages 499-516, March.
    8. Björn Thor Arnarson & Joakim Gullstrand, 2022. "Linking local services to global manufactures," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(1), pages 3-34, January.
    9. Jiaxuan Zhang & Hongsheng Zhang & Xuhang Shen & Bo Meng, 2024. "How Does Economic Policy Uncertainty Impact a Country's Position in Global Value Chains?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 32(5), pages 28-52, September.
    10. Raff, Horst & Trofimenko, Natalia, 2013. "World market access of emerging-market firms: The role of foreign ownership and access to external finance," Kiel Working Papers 1848, Kiel Institute for the World Economy.
    11. Lei Yang & Qianli Dong & Ziqiang Tong & Qiuling Wang & Jiani Wu & Lili Wang, 2025. "The evolution of manufacturing comparative advantage along global value chains: the amplifying role of logistics performance," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 161(2), pages 539-569, May.
    12. Stefano Federico & Enrico Tosti, 2017. "Exporters and Importers of Services: Firm-Level Evidence on Italy," The World Economy, Wiley Blackwell, vol. 40(10), pages 2078-2096, October.
    13. Liu, Xuepeng & Mattoo, Aaditya & Wang, Zhi & Wei, Shang-Jin, 2020. "Services development and comparative advantage in manufacturing," Journal of Development Economics, Elsevier, vol. 144(C).
    14. Honggue Lee, 2013. "The Effects of Preferential Rules of Origin on Trade Flows," Korean Economic Review, Korean Economic Association, vol. 29, pages 379-403.
    15. Markus Kelle, 2012. "Crossing Industrial Borders: German Manufacturers as Services Exporters," Development Working Papers 329, Centro Studi Luca d'Agliano, University of Milano, revised 27 Mar 2012.
    16. Roger Bandick, 2016. "Offshoring, Plant Survival and Employment Growth," The World Economy, Wiley Blackwell, vol. 39(5), pages 597-620, May.
    17. Woori Lee, 2017. "Services liberalization and GVC participation: New evidence for heterogeneous effects by income level and provisions," CTEI Working Papers series 08-2017, Centre for Trade and Economic Integration, The Graduate Institute.
    18. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    19. Pattnayak, Sanja Samirana & Chadha, Alka, 2022. "Servicification and manufacturing exports: Evidence from India," Economic Modelling, Elsevier, vol. 108(C).
    20. Bianka Dettmer, 2012. "Business services outsourcing and economic growth: Evidence from a dynamic panel data approach," Jena Economics Research Papers 2012-049, Friedrich-Schiller-University Jena.
    21. Roger Bandick, 2020. "Global sourcing, productivity and export intensity," The World Economy, Wiley Blackwell, vol. 43(3), pages 615-643, March.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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