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Outsourcing versus Integration at Home or Abroad

Stefano Federico

No 742, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Using data on a sample of Italian manufacturing companies, this paper analyzes the location (at home or abroad) and the mode of organization (outsourcing versus integration) of intermediate inputs production. We find evidence of a productivity ordering (largely consistent with the assumptions in Antr�s and Helpman 2004) where foreign integration is chosen by the most productive and domestic outsourcing by the least productive firms; those with medium-high productivity choose domestic integration, those with medium-low productivity foreign outsourcing. We also find that the preference for integration over outsourcing is positively related to some indicators of headquarter intensity, notably capital intensity, as predicted by Antr�s (2003) and Antr�s and Helpman (2004).

Keywords: international outsourcing; foreign direct investment; intra-firm trade; productivity (search for similar items in EconPapers)
JEL-codes: F12 F23 L22 (search for similar items in EconPapers)
Date: 2010-02
New Economics Papers: this item is included in nep-bec, nep-com, nep-eff and nep-int
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