Greasing the wheels of international commerce: How services facilitate firms' international sourcing

Arbeitspapier

We use unique plant-level data to study the link between the local availability of services and the decision of manufacturing firms to source materials from abroad. To guide our empirical analysis we develop a monopolistic-competition model of the materials sourcing decisions of heterogeneous firms. The model generates predictions about how the intensity of international sourcing of materials depends on a firm's productivity and the availability of local services. These predictions are supported by the data. We find evidence that more productive manufacturing firms tend to have a higher ratio of imported materials to sales. In addition, we find evidence that services grease the wheels of international commerce: A greater availability of services across regions, industries and time increases a firm's foreign sourcing of materials relative to sales. Interestingly, this positive impact of local service availability on imports especially applies to stand-alone firms that, unlike multinationals, are less likely to rely on imported or internally provided services.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2941

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Organization of Production
• Subject: international trade ; services ; off-shoring ; supply chain management ; firm heterogeneity ; Internationale Beschaffung ; Offshoring ; Lieferanten-Kunden-Beziehung ; Unternehmensdienstleistung ; Außenhandel ; Monopolistischer Wettbewerb ; Supply Chain Management ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Debaere, Peter ; Görg, Holger ; Raff, Horst
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/30706
• Last update: 10.03.2025, 11:41 AM CET