The purpose of this article is to investigate the effects of domestic and foreign sourcing on firm-level productivity. We develop a simple framework that permits the introduction of both domestic outsourcing and offshoring in a conventional production function. We find that the decision
to outsource has a positive impact on the level of productivity as it permits the relocation of parts of the production process to external suppliers. Furthermore, there is a positive impact on output resulting from domestic outsourcing and offshoring like any other input.
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total factor productivity
Document Type: Research Article
Departamento de Economía Aplicada II, Universidad Complutense de Madrid, Madrid, Spain
Departamento de Fundamentos del Análisis Económico I, Universidad Complutense de Madrid, Madrid, Spain
Departamento de Análisis Económico II, UNED, Madrid, Spain
Publication date: 2014-05-24
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