Offshoring in a Ricardian World
Published By: NBER on eSS | Published Date: June, 05 , 2007Falling costs of coordination and communication have allowed firms in rich countries to fragment their production process and offshore an increasing share of the value chain to low-wage countries. This paper proposes a Ricardian model where both of these effects are present and analyzes the effects of increased fragmentation and offshoring in the short run and in the long run (when technology levels are endogenous). Long run analysis shows that in particular the rich country always gains from increased fragmentation , whereas poor countries see their static gains partially eroded by a decline in their research efforts.
Author(s): Andrés Rodríguez-Clare | Posted on: Jul 05, 2007 | Views(2955) | Download (1797)