Does offshoring contribute to reducing domestic air emissions? Evidence from Belgian manufacturing

- This paper looks at the role of offshoring in reducing domestic air emissions.
- Changes in air emissions are decomposed to measure the contribution of offshoring.
- Offshoring is measured by the share of imported intermediates in total intermediates.
- Three aggregate air emission indicators are analysed for Belgian manufacturing.
- 6-17% of the fall in domestic air emissions over 1995-2007 is due to offshoring.

Since the mid-90s, production-related air emissions in Belgian manufacturing have fallen substantially and it can be shown that the pace of the fall has been fastest for domestic intermediates. It is widely debated whether offshoring has played a role in this fall by replacing domestic intermediates by imported intermediates. This paper develops a decomposition analysis to measure the contribution of offshoring - the share of imported intermediates in total intermediates - to the fall in air emissions for domestic intermediates. Based on the results from this decomposition analysis, it was possible to calculate that 17% of the fall in greenhouse gas emissions, 6% of the fall in acidifying emissions and 7% of the fall in tropospheric precursor emissions in Belgian manufacturing between 1995 and 2007 can be attributed to offshoring.