OFFSHORING AND THE POLARIZATION OF THE DEMAND FOR CAPITAL

Dirk Bursian and Arne Nagengast

Economic Inquiry, 2020, vol. 58, issue 1, 260-282

Abstract: In the past decades, the importance of different capital goods has gradually changed, which has led to a structural shift in the composition of the demand for capital at the expense of more traditional capital inputs such as machinery and equipment. In this paper, we focus on a novel driver of this development by analyzing the effect of offshoring on the demand for capital by asset class using a rich country‐sector panel dataset. Estimating a system of factor demand equations, we document that offshoring reduces the relative demand for non‐ICT capital, thereby polarizing the demand for capital. (JEL F14, F62, E22)

Date: 2020
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https://doi.org/10.1111/ecin.12828

Related works:
Working Paper: Offshoring and the polarisation of the demand for capital (2018)
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