Incomplete specialization and offshoring across Europe

Richard Frensch (), Jan Hanousek and Evžen Kočenda

No 321, Working Papers from Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies)

Abstract: Research for evidence on offshoring activities and its driving forces has been done by analyzing gross trade flows related to offshoring using gravity equations augmented by ad hoc measures of supply-side country differences. We develop a specification grounded in incomplete specialization that views bilateral gravity equations as statistical relationships constrained on countries’ multilateral specialization patterns. We apply this approach to an empirical analysis of the European trade in parts and components. Our results bring evidence that bilateral trade related to offshoring activities across Europe is driven by countries’ multilateral specialization incentives that are expressed by specific supply-side country differences relative to the rest of the world.

Keywords: International trade; gravity model; offshoring; panel data; European Union (search for similar items in EconPapers)
JEL-codes: F14 F16 L24 (search for similar items in EconPapers)
Pages: 38
Date: 2012-09
New Economics Papers: this item is included in nep-eur
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Incomplete Specialization and Trade in Parts and Components (2013)
Working Paper: Incomplete Specialization and Offshoring across Europe (2012)
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