Productivity effects from inter-industry offshoring and inshoring: Firm-level evidence from Belgium

Bruno Merlevede and Angelos Theodorakopoulos

No 165, FIW Working Paper series from FIW

Abstract: In this paper we confirm the existence of improvements of firm productivity when domestic upstream and downstream firms become more internationalized and therefore offshore (import intermediate inputs) and inshore (export final output for intermediate input usage) intensively. China’s accession to the WTO, which in the case of Belgium reduced trade barriers to China, help us confirm that these inter-industry productivity improvements can also be generated form a quasi-trade liberalization event. Upstream linkages are the dominant source of these productivity benefits and are reaped mainly from medium-low tech, labor intensive and upstream industries. Finally, we draw upon the importance of biases in our results from misspecifications common in the literature. From ignoring the dynamic nature of productivity, results appear overestimated or with sign reversals. From estimating a value-added instead of a gross-output production function, results become spurious.

Keywords: Offshoring; supply chain; spillovers; productivity (search for similar items in EconPapers)
JEL-codes: F14 F15 F2 (search for similar items in EconPapers)
Pages: 57
Date: 2016-02
New Economics Papers: this item is included in nep-bec, nep-eff, nep-int and nep-tid
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