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Dynamic Effects of Corruption on Offshoring

Abstract: For international outsourcing to occur, agents from different jurisdictions must agree on a contract. Using Swedish firm-level data, we analyze offshoring and how a firm’s choice of target country and the dynamics of offshored volumes are affected by corruption. The results suggest that corruption is a deterrent to offshoring and that internationalized firms trading with many countries use their flexibility to avoid corrupt countries. Furthermore, firms that are able to establish long-term contracts do so by starting small and successively deepening their engagements.

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Paper provided by The Ratio Institute in its series Ratio Working Papers with number 182.

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Length: 32 pages
Date of creation: 20 Dec 2011
Date of revision:
Handle: RePEc:hhs:ratioi:0182
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