Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level

Abstract

This paper documents how productivity varies with globalization modes, based on a firm-level data set covering all manufacturing industries in Japan without any firm-size threshold. Only a small fraction of firms outsource, export, or invest abroad. Foreign outsourcers and exporters tend to be less productive than the firms active in FDI or in multiple globalization modes but more productive than domestic firms. This productivity ordering is robust even when firm size, factor intensity, and/or industry are controlled for. This paper also finds that outsourcers are on average less capital intensive than other globalized firms.

Offshoring domestic jobs

“…The Economist (2004) from a small survey of 150 British firms, while it is significantly higher 29 than the share of firms conducting international outsourcing and/or FDI in Japan as reported by Tomiura (2007). Evaluated at χ = 0.149, our model predicts that the observed pattern of offshoring has increased welfare in Germany by 3.8 percent and at the same time has widened the gap between entrepreneurial income and wages by 12.5 percent.…”

“…Japanese manufacturing firms only 3.3 percent of the producers declare to be involved in international outsourcing and/or FDI (Tomiura, 2007).…”

Expanding to outward foreign direct investment or not? A multi-dimensional analysis of entry mode transformation of Chinese private exporting firms

“…It is expected that the most productive exporting firms engage in OFDI and become multinational enterprises (MNEs) (Greenaway & Kneller, 2007). This predication has received empirical support in a number of recent studies of developed countries including Germany (Arnold & Hussinger, 2010;Wagner, 2006), Italy (Castellani & Zanfei, 2007), France (Engel & Procher, 2011), Ireland (Girma et al, 2004), UK (Girma et al, 2005), Japan (Head & Ries, 2003;Kimura & Kiyota, 2006;Tomiura, 2007) and US (Helpman et al, 2004). Thus, we hypothesise:…”

“…Productivity heterogeneity theory has received empirical support in the studies of German, Italian, French, Irish, British, Japanese, and American firms (Arnold & Hussinger, 2010;Castellani & Zanfei, 2007;Engel & Procher, 2011;Girma, Görg & Strobl, 2004;Girma, Kneller & Pisu, 2005;Head & Ries, 2003;Helpman, Melitz & Yeaple, 2004;Kimura & Kiyota, 2006;Tomiura, 2007;Wagner, 2006). However there is no study that empirically tests this theory in the context of China.…”

China: A New Model for Growth and Development

“…The inclusion of ODI into reviews of internationalisation decision-making starts with HMY (2004), but mostly are still drawn from high income economies, such as the United States (Helpman et al 2004), and Japan (Head & Ries 2003;Tomiura 2007;Todo 2011). …”