Analysis of the offshoring network: Empirical evidence of the implied comparative advantage in offshoring

Mery Tamayo Plata (), Cristian Camilo Chica Castaño and Gustavo Canavire-Bacarreza

The Journal of International Trade & Economic Development, 2021, vol. 30, issue 1, 27-46

Abstract: Using a measure of the volume of offshoring conducted by 62 countries, the intrinsic properties of the global offshoring network are analyzed: size, density, and others. From these properties, we extract information about which countries and sectors of the economy are the main drivers of the network. We find a regularity through the network of all sectors, which we call a stylized fact, that yields an insight into the uniform trade integration of countries through time. Additionally, we construct the measure of implied comparative advantage (ICA) – proposed by Hausmann et al. (2019. Implied comparative advantage) – and empirically verify, for the offshoring conducted by these 62 countries, the hypothesis of a systematic correlation between pairs of industries across different countries. Finally, since the ICA measure is a predictor of the revealed comparative advantage for the offshoring, we verify that the ICA measure preserves the basic properties of the original offshoring network.

Date: 2021
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DOI: 10.1080/09638199.2020.1804605

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