International outsourcing's role in international technology diffusion - the Irish case

Fergal McCann

No 200923, Working Papers from School of Economics, University College Dublin

Abstract: This paper analyses how international outsourcing affects plant productivity, with the major contribution lying in the identification of heterogeneous effects for firms with differing internationalisation status. The results point to a striking pattern: the status of being an outsourcer matters strongly for indigenous non-exporters, while for exporters and foreign affiliates, tfp increases are lower, insignificant and sometimes negative. On the other hand, a higher intensity of outsourcing matters for both exporters and foreign affiliates, but not for indigenous non-exporters. Similarly, in dynamic analysis, indigenous non-exporters are found to increase tfp for two periods after entering into international outsourcing, while indigenous exporters experience one more weakly significant period of growth. The key message of the paper is thus: outsourcing's role as a channel of technology diffusion is most pronounced when it serves as a first exposure to international markets.

Keywords: Outsourcing; Productivity; Firm structure; Offshore assembly industry; Contracting out; Industrial productivity; Industrial organization (search for similar items in EconPapers)
JEL-codes: F13 F14 F23 L23 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-cse and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:wpaper:200923

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