Offshoring components and their effect on employment: firms deciding about how and where

Firms must take two fundamental decisions: how and where to produce. Traditional measures of offshoring include information on both decisions but cannot distinguish between them. In this article, we attempt to distinguish the evolution of the requirement of inputs per unit of output (how to produce)...

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Bibliographic Details
Published in:Applied economics 2012-03, Vol.44 (8), p.1009-1020
Main Authors: Vecina, María Ángeles Cadarso, Sanz, Nuria Gómez, Santiago, Luis Antonio López, Gómez, María Ángeles Tobarra
Format: Article
Language:English
Subjects:
Cost minimization
Decision making
Employment
Information
Input output analysis
Labor economics
Location analysis
Location of industry
Outsourcing
Production management
Production systems
Spain
Studies
Subcontracting
Technological change
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Summary:Firms must take two fundamental decisions: how and where to produce. Traditional measures of offshoring include information on both decisions but cannot distinguish between them. In this article, we attempt to distinguish the evolution of the requirement of inputs per unit of output (how to produce) from the delocalization of production to others countries (where to produce). We call global technical change to the first element and net offshoring to the second. We further decompose net offshoring into net inter-industry substitution and intra-industrial offshoring (replacement of domestic inputs for imported ones from the same sector). This last measure quantifies better the concept of delocalization of production to other countries looking for lower costs, the original idea behind offshoring. This decomposition allows us to further investigate on whether technical change or net offshoring is the main factor in recent Spanish industrial employment changes.
ISSN:0003-6846
1466-4283
DOI:10.1080/00036846.2010.532113