کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
973120 | 1479783 | 2015 | 19 صفحه PDF | دانلود رایگان |
• We model endogenous offshoring.
• Offshoring occurs and evolves in a bell-shaped pattern.
• A fall in offshoring costs benefits the high-wage country but hurts the other.
• Trade liberalization and ICT improvement have different policy implications.
We investigate the issue of offshoring in a general-equilibrium model of two countries and one sector of increasing returns to scale. Our model uncovers that offshoring occurs and endogenously evolves in a bell-shaped pattern when trade costs decline, explaining some stylized facts in developed countries. Furthermore, this simple framework can be applied to examine the welfare issue. We find that a fall in offshoring costs benefits the high-wage country but hurts the low-wage country. On the other hand, the low-wage country benefits with trade liberalization. The impact of falling trade costs on the welfare of the high-wage country depends on the values of offshoring freeness.
Journal: The North American Journal of Economics and Finance - Volume 31, January 2015, Pages 75–93