International Trade, Flexible Manufacturing and Outsourcing

Eckel, Carsten (2005): International Trade, Flexible Manufacturing and Outsourcing. CeGE discussion paper,

Abstract

This study analyzes the impact of international trade on the diffusion of flexible manufacturing in a general equilibrium framework. Suppliers produce a flexible base product that can be adapted to the specific input requirements of a continuum of downstream industries. The vertical structure is determined by the trade-off between economies of scope in flexible manufacturing and product specificity of in-house production. In this framework, globalization can lead to alternating waves of insourcing and outsourcing, but once the world market reaches a threshold size, outsourcing prevails. We also derive a number of testable predictions with regard to firm size and productivity measures that are in line with recent empirical and casual evidence.

• Dokumententyp: Paper
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Lehrstühle > Seminar für Außenwirtschaftstheorie
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• Sprache: Englisch