On Intra-firm Trade and Multinationals: Offshoring and Foreign Outsourcing in Manufacturing

Ashok Deo Bardhan and Dwight Jaffee
Additional contact information
Ashok Deo Bardhan: University of California
Dwight Jaffee: University of California

Chapter 2 in Multinationals and Foreign Investment in Economic Development, 2005, pp 26-41 from Palgrave Macmillan

Abstract: Abstract For advanced industrialized economies, the era of globalization has created key roles for both the foreign outsourcing of intermediate inputs and intra-firm trade.1 Recent papers, including Feenstra and Hanson (1996) and Brainard (1997), have treated these subjects separately, but their interaction and possible intersection (namely, transnational intra-firm trade in intermediate inputs) have received little attention.2 Low-cost foreign outsourcing has long attracted many firms, whether part of a multinational enterprise or acting as independent companies. Increasingly, however, organizational and other considerations have motivated firms to use imported inputs from affiliates abroad, instead of inputs from arm’s-length domestic manufacturers; this activity amounts to vertical integration across borders. This process of intra-firm offshoring seems to be particularly intense in the case of high-tech sectors. Indeed, one of the signal attributes of a manufactured high-tech product is the extensive nature of its value-chain, the number of intermediate products and services, and the global, fragmented, nature of the final output.3 Progress in transportation, communications and standardization has significantly increased the fragmented nature of production. The high-tech value-chain is now a multilateral, multinational production mosaic, involving many countries but often just one firm or a group of affiliated firms.

Keywords: Foreign Direct Investment; Gross Domestic Product; Intermediate Good; Intermediate Input; Multinational Enterprise (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (6)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-0-230-52295-4_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230522954

DOI: 10.1057/9780230522954_2

Access Statistics for this chapter

More chapters in International Economic Association Series from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().