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Productivity effects from inter-industry offshoring and inshoring: Firm-level evidence from Belgium

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  • Bruno Merlevede
  • Angelos Theodorakopoulos

Abstract

In this paper we confirm the existence of improvements of firm productivity when domestic upstream and downstream firms become more internationalized and therefore offshore (import intermediate inputs) and inshore (export final output for intermediate input usage) intensively. China’s accession to the WTO, which in the case of Belgium reduced trade barriers to China, help us confirm that these inter-industry productivity improvements can also be generated form a quasi-trade liberalization event. Upstream linkages are the dominant source of these productivity benefits and are reaped mainly from medium-low tech, labor intensive and upstream industries. Finally, we draw upon the importance of biases in our results from misspecifications common in the literature. From ignoring the dynamic nature of productivity, results appear overestimated or with sign reversals. From estimating a value-added instead of a gross-output production function, results become spurious.

Suggested Citation

  • Bruno Merlevede & Angelos Theodorakopoulos, 2016. "Productivity effects from inter-industry offshoring and inshoring: Firm-level evidence from Belgium," FIW Working Paper series 165, FIW.
  • Handle: RePEc:wsr:wpaper:y:2016:i:165
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    More about this item

    Keywords

    Offshoring; supply chain; spillovers; productivity;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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