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The Role of Cross-Border Networks of Skilled Labor in Offshore Outsourcing: Empirical Evidence Based on the Network Theory

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Abstract

This study investigates the determinant role of the cross-border movement of skilled labor in the expansion of service trade between the US, and both developed and developing countries. For this purpose, we employ the key concepts of network theory as an analytical framework and conduct panel data analysis and graphical modeling analysis for 31 countries from 1999 to 2008. In this decade, offshore outsourcing in the service trade took off worldwide. We use data for each country’s service exports to the US, number of H-1B visas issued, GNI per-capita, network readiness index, and an English dummy for the official language. We illustrate the trajectory and interactions between these factors. These analyses yield three observations. First, service trade with the US is more intensive among higher income countries. Second, the number of H-1B visas issued has a positive effect on service exports to the US. Third, individuals in lower income countries tend to desire H-1B visas and create intensive skilled labor networks with the US, the path through which developing countries such as India expanded their service exports to the US.

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Fig. 1

Source: Bureau of Economic Analysis, US Department of Commerce

Fig. 2

Source: Nishiguchi [20], with some modifications

Fig. 3

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Notes

  1. Many computer programs had to patch their year code bugs because early software programs allocated only two digits rather than four to save memory space.

  2. Fong [21] provides a comprehensive review of leapfrogging development and Singh [22] adopts this view to illustrate the Indian telecommunication industry.

  3. See Dempster [24] for the theoretical background.

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Acknowledgements

The study comprises the background and primary motivations of the research project supported by JSPS KAKENHI Grant number JP18K01572. The authors wish to thank anonymous referees for providing thoughtful suggestions and insights, which have enriched the manuscript and produced a better and more balanced account of the research.

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Authors and Affiliations

  1. Kyushu University, 744, Motooka, Nishi-ku, Fukuoka, 819-0395, Japan

    Akihiko Shinozaki

  2. Tohoku Bunka Gakuen University, 6-45-1, Kunimi, Aoba-ku, Sendai, 981-8551, Japan

    Shigehiro Kubota

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  1. Akihiko Shinozaki
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  2. Shigehiro Kubota
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Correspondence to Akihiko Shinozaki.

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Shinozaki, A., Kubota, S. The Role of Cross-Border Networks of Skilled Labor in Offshore Outsourcing: Empirical Evidence Based on the Network Theory. Rev Socionetwork Strat 12, 153–165 (2018). https://doi.org/10.1007/s12626-018-0028-3

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