GEP 10/22: Input Characteristics and the Mode of Offshoring: Evidence for French Firms

Summary

Using data on international transactions of intermediate inputs we investigate the choice between FDI and outsourcing. We provide support for the property rights model and the knowledge capital model.

Abstract

Using rich data on the international transactions of intermediate inputs by French firms we investigate the determinants of the choice between vertical integration and outsourcing at the international level. Our results show that the probability of vertical integration is reduced by the extent of asset specificity of imported inputs and enhanced by the significance of the inputs in the cost share of the firm. Our findings provide support for the property right models of offshoring and also for the knowledge capital model.

Download the paper in PDF format

Authors

Liza Jabbour and Richard Kneller

View all GEP discussion papers | View all School of Economics featured discussion papers