Review of World Economics

, Volume 149, Issue 1, pp 131–149 | Cite as

Offshoring, domestic outsourcing and productivity: evidence for a number of European countries

Original Paper

Abstract

The growth in offshoring and its economic effects have been subject to extensive empirical analysis. Yet, many studies have not distinguished accurately between offshoring, domestic outsourcing, and supplier changes. The present study provides stylized facts on offshoring in Europe between 1995 and 2008 taking into account this distinction. This study shows that service activities have been systematically offshored and outsourced domestically during this period, whereas manufacturing activities have been systematically offshored or moved from domestic to foreign suppliers. Overall the share of internal production has gone down by 4.5 percentage points, which raises the question whether firms have achieved productivity gains through this specialisation effort. Combining industry-level data on offshoring and domestic outsourcing with a firm panel, this study finds that service offshoring and offshoring of non-core manufacturing activities have contributed to an increase in productivity, whereas no statistically significant link is found for offshoring of core manufacturing activities and domestic outsourcing. The estimated productivity gains are found to be driven in particular by the gains of multinational firms.

Keywords

Offshoring Domestic outsourcing Productivity 

JEL classification

F23 D24 L24 L60 

Supplementary material

10290_2012_139_MOESM1_ESM.pdf (89 kb)
Supplementary material 1 (PDF 88 kb).

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Copyright information

© Kiel Institute 2012

Authors and Affiliations

  1. 1.Kiel Institute for the World EconomyKielGermany

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