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Offshoring in a Ricardian World

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  • Andrés Rodríguez-Clare

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Abstract

Falling costs of coordination and communication have allowed firms in rich countries to fragment their production process and offshore an increasing share of the value chain to low-wage countries. This paper proposes a Ricardian model where both of these effects are present and analyzes the effects of increased fragmentation and offshoring in the short run and in the long run (when technology levels are endogenous). Long run analysis shows that in particular the rich country always gains from increased fragmentation , whereas poor countries see their static gains partially eroded by a decline in their research efforts.

Suggested Citation

  • Andrés Rodríguez-Clare, 2007. "Offshoring in a Ricardian World," Working Papers id:1043, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:1043
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Arne Bigsten & Dick Durevall & Farzana Munshi, 2012. "Offshoring and occupational wages: Some empirical evidence," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(2), pages 253-269, January.
    2. Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
    3. Martin Davies, 2016. "Technology Transfer and North–South," Review of International Economics, Wiley Blackwell, vol. 24(3), pages 447-483, August.
    4. Hartmut Egger & Udo Kreickemeier & Jens Wrona, 2017. "Offshoring Domestic Jobs," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 2, pages 27-70 World Scientific Publishing Co. Pte. Ltd..
    5. Bøler, Esther Ann & Moxnes, Andreas & Ulltveit-Moe, Karen-Helene, 2012. "Technological Change, Trade in Intermediates and the Joint Impact on Productivity," CEPR Discussion Papers 8884, C.E.P.R. Discussion Papers.
    6. Pol Antràs & Esteban Rossi-Hansberg, 2009. "Organizations and Trade," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 43-64, May.
    7. Devashish Mitra & Priya Ranjan, 2007. "Offshoring and Unemployment," Working Papers 060719, University of California-Irvine, Department of Economics.
    8. Alireza Naghavi & Gianmarco Ottaviano, 2009. "Offshoring and product innovation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(3), pages 517-532, March.
    9. Stijepic, Denis & Wagner, Helmut, 2008. "Impacts of Intermediate Trade on Structural Change," MPRA Paper 40841, University Library of Munich, Germany, revised 23 Aug 2012.
    10. Fally,Thibault & Hillberry,Russell Henry, 2015. "A Coasian model of international production chains," Policy Research Working Paper Series 7434, The World Bank.
    11. Rosario Crinò, "undated". "Service Offshoring and White-Collar Employment," Working Papers 391, Barcelona Graduate School of Economics.
    12. Gene M. Grossman & Esteban Rossi‐Hansberg, 2012. "Task Trade Between Similar Countries," Econometrica, Econometric Society, vol. 80(2), pages 593-629, March.
    13. Kwok Tong Soo, 2014. "The gains from trade in intermediate goods," Working Papers 63719205, Lancaster University Management School, Economics Department.
    14. repec:eee:reveco:v:54:y:2018:i:c:p:244-261 is not listed on IDEAS
    15. Muendler, Marc-Andreas, 2017. "Trade, technology, and prosperity: An account of evidence from a labor-market perspective," WTO Staff Working Papers ERSD-2017-15, World Trade Organization (WTO), Economic Research and Statistics Division.
    16. repec:eee:eecrev:v:98:y:2017:i:c:p:217-239 is not listed on IDEAS
    17. repec:gen:geneem:11112 is not listed on IDEAS

    More about this item

    Keywords

    fragmentation; outsourcing; low-wage countries effect; research efforts.; value chain; Economics;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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