DP14485 Heterogeneous Globalization: Offshoring and Reorganization
|Author(s):||Andrew B. Bernard, Teresa C Fort, Valerie Smeets, Frederic Warzynski|
|Publication Date:||March 2020|
|Keyword(s):||import competition, Innovation, offshoring, R&D, Skilled Workers, technology|
|JEL(s):||F14, F61, L25|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=14485|
This paper exploits a unique offshoring survey to show that firms continue domestic production of the same goods they offshore to low-wage countries. This shift towards ``produced-good imports" coincides with a reallocation of labor from physical production to innovation and technology occupations, and an increase in domestically produced varieties' unit values. These responses suggest an additional, firm-level benefit of trade liberalization: the opportunity to offshore production of low-quality varieties, thereby freeing up resources for the development, production, and marketing of higher-quality varieties. Firms' reactions also motivate a new offshoring measure â?? produced-good imports â?? that is readily observed in most firm-level datasets.