The Dynamics of Offshoring and Institutions

Arbeitspapier

Previous research has recognized that weak institutions can hamper investments and alter patterns of trade. However, little is known about the impact of institutional quality on offshoring. This is surprising, given that offshoring has become an important part of many firms’ internationalization strategy. This study uses detailed Swedish firm-level data on production and trade in combination with a large set of institutional measures of the target economies to study the relationship between institutional quality and offshoring. The results suggest that weak institutions are negatively related to offshoring in general and to offshoring of R&D-intensive goods in particular. Furthermore, firms that are able to establish long-term contracts do so by starting small and successively deepening their engagements. These results are robust to a large number of econometric specifications and various measures of institutional quality.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 919

Classification and Topics

• Classification: Wirtschaft ; Empirical Studies of Trade ; Multinational Firms; International Business ; Other Economic Systems: Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
• Subject: Offshoring ; Institutional quality ; Firm-level data ; Auslandsverlagerung ; Produktionsstandort ; Institutionelle Infrastruktur ; Schweden

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Heyman, Fredrik ; Gustavsson Tingvall, Patrik
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/81504
• Last update: 10.03.2025, 11:43 AM CET