Productivity Gains from Offshoring

Tinbergen Institute Discussion Paper No. 07-089/3

21 Pages Posted: 25 Nov 2007

See all articles by Frank A. G. den Butter

Frank A. G. den Butter

Vrije Universiteit Amsterdam - Economics

Christiaan Pattipeilohy

De Nederlandsche Bank - Monetary and Economic Policy Department; Vrije Universiteit Amsterdam, School of Business and Economics

Date Written: November 19, 2007

Abstract

A major question in the globalization debate is whether outsourcing and offshoring activities are beneficial to the home country. This paper investigates the effects on productivity and trade from the perspective of transaction costs, using a recent theory on trade in tasks. A production function is estimated for the Netherlands for the period 1972-2001. It suggests that the effect of offshoring manufacturing and services on total factor productivity (TFP) is positive and larger than the effect of R&D on productivity.

Keywords: globalization, offshoring, foreign direct investments, transaction costs, total factor productivity

JEL Classification: F10, F43, O47

Suggested Citation

den Butter, Frank A. G. and Pattipeilohy, Christiaan, Productivity Gains from Offshoring (November 19, 2007). Tinbergen Institute Discussion Paper No. 07-089/3, Available at SSRN: https://ssrn.com/abstract=1032125 or http://dx.doi.org/10.2139/ssrn.1032125

Frank A. G. Den Butter (Contact Author)

Vrije Universiteit Amsterdam - Economics ( email )

Boelelaan 1105
NL 1081 HV Amsterdam
Netherlands
+31 20 444 6030 (Phone)

Christiaan Pattipeilohy

De Nederlandsche Bank - Monetary and Economic Policy Department ( email )

Westeinde 1
1017 ZN Amsterdam
Netherlands

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

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