Quantifying the productivity effects of global sourcing

Sara Formai (sara.formai@bancaditalia.it) and Filippo Vergara Caffarelli
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Sara Formai: Bank of Italy

No 1075, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This work analyses the effect of the global sourcing of intermediate goods on productivity growth. To identify the impact of global sourcing, we employ the methodology proposed in a different context by Rajan and Zingales (1998). In particular we interact the length and the width of sectoral production chains with a measure of the intensity of countries’ intermediate imports. We find evidence indicating that off-shoring significantly increases labour productivity and total factor productivity at the sector level in countries that rely on global sourcing. The driver of total factor productivity growth depends on the structure of the global value chain that intermediates are sourced from: long chains trigger technology improvements while wide chains cause a reallocation of resources towards more productive firms within the same sector.

Keywords: productivity growth; global sourcing; global value chains (search for similar items in EconPapers)
JEL-codes: D24 F62 F66 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-eff and nep-int
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1075_16

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