Greasing the Wheels of International Commerce: How Services Facilitate Firms' International Sourcing

Görg, Holger, Horst Raff and Peter Debaere
Authors registered in the RePEc Author Service: Holger Görg

No 7675, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use unique plant-level data to study the link between the local availability of services and the decision of manufacturing firms to source materials from abroad. To guide our empirical analysis we develop a monopolistic-competition model of the materials sourcing decisions of heterogeneous firms. The model generates predictions about how the intensity of international sourcing of materials depends on a firm's productivity and the availability of local services. These predictions are supported by the data. We find evidence that more productive manufacturing firms tend to have a higher ratio of imported materials to sales. In addition, we find evidence that services grease the wheels of international commerce: A greater availability of services across regions, industries and time increases a firm's foreign sourcing of materials relative to sales. Interestingly, this positive impact of local service availability on imports especially applies to stand-alone firms that, unlike multinationals, are less likely to rely on imported or internally provided services.

Keywords: Firm heterogeneity; International trade; Off-shoring; Services; Supply chain management (search for similar items in EconPapers)
JEL-codes: F12 L23 (search for similar items in EconPapers)
Date: 2010-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Greasing the wheels of international commerce: how services facilitate firms' international sourcing (2013)
Working Paper: Greasing the Wheels of International Commerce: How Services Facilitate Firms' International Sourcing (2010)
Working Paper: Greasing the Wheels of International Commerce: How Services Facilitate Firms' International Sourcing (2010)
Working Paper: Greasing the Wheels of International Commerce: How Services Facilitate Firms’ International Sourcing (2010)
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