Evaluating estimates of materials offshoring from US manufacturing

When materials offshoring is measured by estimating imported intermediate inputs, a common assumption used is that an industry's imports of each input, relative to its total demand, is the same as the economy-wide imports relative to total demand: this is the so-called “import comparability” or “proportionality” assumption. A report to the National Research Council identified this assumption as being a significant limitation of current data collection and analysis. In this note we move beyond this assumption to obtain a direct measure of imported materials by industry for the United States in 1997. At the 3-digit I-O industry level, there is a correlation of 0.68 between the offshoring shares made with and without the proportionality assumption, and a higher correlation of 0.87 when the shares are value weighted. While most value-weighted industries have differences below 50 percentage points in the two estimates, there are a significant number of cases that differ by 10 percentage points or more.

► We construct offshoring measures for US 3-digit I-O industries in 1997. ► Our offshoring measures do not rely on the “proportionality” assumption. ► The correlation between offshoring with and without proportionality is 0.68. ► The weighted correlation with and without proportionality is 0.87. ► In some industries, the difference is more than 10 percentage points.