A Simple Theory of Offshoring and Reshoring
Angus Chu (),
Guido Cozzi () and
Yuichi Furukawa ()
MPRA Paper from University Library of Munich, Germany
In this study, we predict a pattern of offshoring and reshoring over the course of economic development. We achieve this, by extending Grossman and Rossi-Hansberg's (2008) model of offshoring in a simple way by assuming that offshoring requires both workers and capital in the offshored country. As a consequence, the accumulation of capital in the offshored country has two opposing effects on offshoring. On the one hand, it increases the wage rate of workers rendering offshoring less attractive. On the other hand, it decreases the rental price of capital rendering offshoring more attractive. Putting these two effects together, we analytically generate the inverted-U pattern of offshoring recently observed in China.
Keywords: trade; offshoring; economic development (search for similar items in EconPapers)
JEL-codes: F11 F16 (search for similar items in EconPapers)
Date: 2013-01, Revised 2013-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/44557/1/MPRA_paper_44557.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/101091/1/MPRA_paper_101091.pdf revised version (application/pdf)
Working Paper: A Simple Theory of Offshoring and Reshoring (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:44557
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().