Working Paper: NBER ID: w11418
Authors: Barbara J. Spencer
Abstract: International outsourcing to lower cost countries such as China and India can best be understood through the enrichment of trade models to include concepts from industrial organization and contract theory that explain the vertical organization of production. The combination of trade with the choice of organizational form represents an important new area for both theoretical and empirical research. This survey paper provides a perspective on this new literature so as to gain insights into the forces driving international outsourcing. The paper focuses on relationship-specific investment, incomplete contracts, and also search and matching, as fundamental concepts that explain outsourcing decisions.
Keywords: No keywords provided
JEL Codes: F1; L14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| relationship-specific investments (D14) | outsourcing contracts (L24) |
| thickness of the market (G10) | outsourcing decisions (L24) |
| lower costs in foreign countries (F23) | outsourcing (L24) |