Offshoring in a Ricardian World
- (pp. 227-58)
Abstract
This paper proposes a Ricardian model to understand the short-run and long-run aggregate effects of increased fragmentation and offshoring on rich and poor countries. The short-run analysis shows that, when offshoring is sufficiently high, further increases in offshoring benefit the poor country and hurt the rich country. But these effects may be reversed in the long run as countries adjust their research efforts in response to increased offshoring. In particular, in the long run, the rich country always gains from increased offshoring, whereas poor countries see their static gains partially eroded by a decline in their research efforts. (JEL F12, F23, L24, M16)Citation
Rodríguez-Clare, Andrés. 2010. "Offshoring in a Ricardian World." American Economic Journal: Macroeconomics, 2 (2): 227-58. DOI: 10.1257/mac.2.2.227Additional Materials
JEL Classification
- F12 Models of Trade with Imperfect Competition and Scale Economies
- F23 Multinational Firms; International Business
- L24 Contracting Out; Joint Ventures; Technology Licensing
- M16 International Business Administration
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