Quantifying reshoring at the macro‐level—Measurement and applications

Abstract

In this paper, we develop a metric of reshoring at the macroeconomic level, at the level of industries or countries. Our dynamic measure computes the change in the domestic–foreign input ratio and therewith captures the idea of moving production back to the home country. Additional conditions ensure that the measure is confined to actual reshoring and does not pick up, for example, mere changes in the scale and composition of production. We show that reshoring is only weakly approximated by reduced offshoring. We compute the reshoring intensity from the World Input Output Database and illustrate the use of the data with several applications. Specifically, we compute trends in reshoring for examples of countries and industry sectors, we investigate reshoring from China, and examine the impact of an increasing degree of automation for reshoring in emerging and developing economies.

Asian Economic Integration Report 2024

“…Discussions around reshoring often focus on increasing the share of inputs from domestic sources, with Krenz and Strulik (2021) using such arguments to develop an indicator of reshoring using multiregional input-output tables to measure the change in the ratio of domestic to foreign inputs. Adopting this approach, Figure 2.10a shows that whereas the change in domestic to foreign inputs in Asia has been positive for much of the period, indicating an increasing share of domestic inputs, since 2019 it has been negative.…”

G20’s Contribution to Inclusive and Resilient Global Value Chains While Promoting Involvement of Least Developed Countries

“…20 Illustratively, Krenz and Strulik (2021) used input-output tables and trade data to calculate the domesticforeign input ratio, and Kearney (2023) used the ratio of imports of manufactured goods to manufacturing output. However, intuitively, a reduction in the share of imports (both finished and intermediate goods) over manufacturing output or the rising domestic-to-foreign input ratio is compatible with reshoring but does not represent evidence of it per se.…”

“…It is argued that only reshoring or localization, or only regionalization, may not work in the longer run. 22 Krenz and Strulik (2021) found that offshoring is still there; however, a rise in reshoring is closely linked to rising automation, and this trend is found to be stronger for developing or emerging economies. 23 Mainly the US, Japan, the EU, etc.…”