A Simple Theory of Offshoring and Reshoring
Series
Economics Working Paper Series (1309)
Type
discussion paper
Date Issued
2013-03
Author(s)
Abstract
In this study, we predict a pattern of offshoring and reshoring over the course of economic development. We achieve this, by extending Grossman and Rossi-Hansberg's (2008) model of offshoring in a simple way by assuming that offshoring requires both workers and capital in the offshored country. As a consequence, the accumulation of capital in the offshored country has two opposing effects on offshoring. On the one hand, it increases the wage rate of workers rendering offshoring less attractive. On the other hand, it decreases the rental price of capital rendering offshoring more attractive. Putting these two effects together, we analytically generate the inverted-U pattern of offshoring recently observed in China.
Language
English
Keywords
trade
offshoring
economic development
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
No
Publisher
University of St.Gallen
Publisher place
St.Gallen
Number
1309
Start page
12
Subject(s)
Eprints ID
221838
File(s)![Thumbnail Image]()
open.access
Name
EWP-1309.pdf
Size
218.39 KB
Format
Adobe PDF
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