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The heterogeneous effect of international outsourcing on firm productivity

  • Fergal McCann


This paper analyses how international outsourcing affects plant productivity. The results point to a striking pattern: the status of being an outsourcer matters strongly for firms that are indigenous and not exporting, while for exporters and foreign affiliates, tfp increases are lower, insignificant and sometimes negative. On the other hand, higher intensity of outsourcing matters for both exporters and foreign affiliates. Similarly, in dynamic analysis, indigenous non-exporters are found to increase tfp for two periods after entering into international outsourcing, while indigenous exporters experience one more weakly significant period of growth. The message is clear: international outsourcing’s effect on tfp is most pronounced when it serves as a first exposure to international markets.

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Article provided by Springer & Institut für Weltwirtschaft (Kiel Institute for the World Economy) in its journal Review of World Economics.

Volume (Year): 147 (2011)
Issue (Month): 1 (April)
Pages: 85-108

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Handle: RePEc:spr:weltar:v:147:y:2011:i:1:p:85-108
DOI: 10.1007/s10290-010-0080-8
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