Financial advantage, outsourcing and FDI under wage uncertainty

E. Kwan Choi and Jai-Young Choi
Authors registered in the RePEc Author Service: Eun Kwan Choi

The North American Journal of Economics and Finance, 2013, vol. 24, issue C, 260-267

Abstract: This paper investigates outsourcing and foreign direct investment (FDI) decisions in North–South trade under conditions of wage uncertainty. The North has a financial advantage to raise capital, but the South has the advantage of low wages. If the expected outsourcing cost is lower than the in-house production cost, some outsourcing to a Southern firm is optimal. However, outsourcing to an FDI firm is superior to outsourcing to a Southern firm as well as in-house production. This finding is consistent with the rising foreign direct investment in China by Northern firms.

Keywords: Outsourcing; Foreign direct investment (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062940812000873
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Financial Advantage, Outsourcing and FDI Under Wage Uncertainity (2013)
Working Paper: Financial Advantage, Outsourcing and FDI under Wage Uncertainty (2013)
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:eee:ecofin:v:24:y:2013:i:c:p:260-267

DOI: 10.1016/j.najef.2012.10.002

Access Statistics for this article

The North American Journal of Economics and Finance is currently edited by Hamid Beladi

More articles in The North American Journal of Economics and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).