The Dynamics of Offshoring and Institutions

Fredrik Heyman and Patrik Tingvall

No 190, Ratio Working Papers from The Ratio Institute

Abstract: Previous research has recognized that weak institutions can hamper investments and alter patterns of trade. However, little is known about the impact of institutional quality on offshoring. This is surprising, given that offshoring has become an important part of many firms’ internationalization strategy. This study uses detailed Swedish firm-level data on production and trade in combination with a large set of institutional measures of the target economies to study the relationship between institutional quality and offshoring. The results suggest that weak institutions are negatively related to offshoring in general and to offshoring of R&D-intensive goods in particular. Furthermore, firms that are able to establish long-term contracts do so by starting small and successively deepening their engagements. These results are robust to a large number of conometric pecifications and various measures of institutional quality.

Keywords: Offshoring; Institutions; Firm-level data (search for similar items in EconPapers)
JEL-codes: F14 F23 P48 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2012-04-11
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The Dynamics of Offshoring and Institutions (2015)
Working Paper: The Dynamics of Offshoring and Institutions (2012)
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