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WP 2009-5 Financialization and the Dynamics of Offshoring in the U.S

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Abstract

Analysis of 35 U.S. manufacturing and service industries over the period 1998-2006 supports aggregate and firm-level studies showing that off-shoring is associated with a higher share of corporate profit in total value added. But these “dynamic” gains from off-shoring have not been realized, because firms have purchased financial assets – especially share buybacks and higher dividend payments – to raise shareholder value, rather than investing in productive assets that raise productivity, growth, employment and income. Despite the corporate sector’s contribution to national savings over the past decade, the off-shoring-financialization linkage reduces the capacity of non-financial corporations to act as a driver of the recovery from the economic crisis that emerged in 2008.

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  • William Milberg, Deborah Winkler, 2009. "WP 2009-5 Financialization and the Dynamics of Offshoring in the U.S," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2009-5, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  • Handle: RePEc:epa:cepawp:2009-5
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    File URL: http://www.economicpolicyresearch.org/scepa/publications/workingpapers/2009/SCEPA_Working_Paper_2009-5.pdf
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    Cited by:

    1. Alessandro Nicita & Victor Ognivtsev & Miho Shirotori, 2013. "Global Supply Chains: Trade And Economic Policies For Developing Countries," UNCTAD Blue Series Papers 55, United Nations Conference on Trade and Development.
    2. Manoj Atolia & Yoshinori Kurokawa, 2014. "Entry Costs, Task Variety, and Skill Flexibility: A Simple Theory of (Top) Income Skewness," Tsukuba Economics Working Papers 2014-001, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba, revised Apr 2015.

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    Keywords

    offshoring; financialization; profit share;

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