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Global ProductionFirms, Contracts, and Trade Structure$
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Pol Antràs

Print publication date: 2015

Print ISBN-13: 9780691168272

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691168272.001.0001

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Contracts and Sourcing: Evidence

Contracts and Sourcing: Evidence

Chapter:
(p.128) 5 Contracts and Sourcing: Evidence
Source:
Global Production
Author(s):

Pol Antràs

Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691168272.003.0005

This chapter develops empirical tests of the global sourcing model introduced in the previous chapter by using detailed data on U.S. imports by product and source country. It first uses the import data aggregated across source countries to explore the determinants of the cross-industry variation in the extent to which U.S. firms rely on domestically produced inputs versus foreign inputs in their production processes. The chapter next exploits the cross-country dimension of U.S. import data to provide richer tests of the model. A critical challenge in the empirical analyses performed here is that the key industry characteristics that shape the differential effect of contract enforcement on the profitability of offshoring across sectors are particularly hard to measure in the data. Hence, the chapter also discusses the hurdles that one encounters when mapping these sectoral characteristics with available data.

Keywords:   global sourcing, global sourcing model, U.S. imports, cross-industry variation, offshoring, contract enforcement

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