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Outsourcing versus Integration at Home or Abroad

  • Stefano Federico


    (Bank of Italy, Economics and International Relations)

Using data on a sample of Italian manufacturing companies, this paper analyzes the location (at home or abroad) and the mode of organization (outsourcing versus integration) of intermediate inputs production. We find evidence of a productivity ordering (largely consistent with the assumptions in Antr�s and Helpman 2004) where foreign integration is chosen by the most productive and domestic outsourcing by the least productive firms; those with medium-high productivity choose domestic integration, those with medium-low productivity foreign outsourcing. We also find that the preference for integration over outsourcing is positively related to some indicators of headquarter intensity, notably capital intensity, as predicted by Antr�s (2003) and Antr�s and Helpman (2004).

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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 742.

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Date of creation: Feb 2010
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Handle: RePEc:bdi:wptemi:td_742_10
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