Effect of Offshoring on Exports of Firms in South Korea

Minjung Kim

International Economic Journal, 2024, vol. 38, issue 4, 689-700

Abstract: This study empirically investigates the export-magnification effect of offshoring using a firm-level panel dataset from the manufacturing sector in South Korea. It estimates the impact of offshoring activities on export performance by examining intra-firm and arm’s length offshoring. The empirical evidence demonstrates the export-magnification effect of offshoring on both export market participation and export intensity. Particularly, the export-magnification effect of offshoring still exists among export entrants switching from non-exporters to exporters. Moreover, a greater export-magnification effect from intra-firm offshoring than from arm’s length offshoring is found using instrumental variable (IV) Tobit and probit models. This indicates that the vertical integration of production processes through intra-firm offshoring has a greater effect on export performance than international outsourcing to third parties.

Date: 2024
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DOI: 10.1080/10168737.2024.2420650

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