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Risks and Advantages of International Relocation of Production: A Review and a Survey

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  • Marco Calabrò
  • Riccardo Gallo

Abstract

New developments in the world economy have triggered a reorganization of production across national borders, especially in advanced countries. In order to keep their performances and respond to an increasing competition, firms have being led by the chance of cheaper labour and new markets to shift employment and factories abroad. This paper reviews the literature emerged from these efforts, focusing on theoretical issues and studying risks and opportunities that foreign trade and investment allow. Using a specific survey on 4,000 firms and a variety of different approaches and statistical indexes (exports, foreign direct investment, TPP) to estimate the phenomenon, our findings do not support the idea that relocation is detrimental to local growth in the home country. The effect of relocation depends on several factors: an evidence of direct link between micro performance and production across national borders is clear only in case of articulate innovation strategy. The paper focuses also on the risk of a gradual impoverishment of the local economies, especially for districts, transferring production abroad.

Suggested Citation

  • Marco Calabrò & Riccardo Gallo, 2007. "Risks and Advantages of International Relocation of Production: A Review and a Survey," L'industria, Società editrice il Mulino, issue 3, pages 463-486.
    • Handle: RePEc:mul:j0hje1:doi:10.1430/25036:y:2007:i:3:p:463-486
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