Vertical FDI versus Outsourcing : The Role of Host Country Human Capital

Publication:
Vertical FDI versus Outsourcing : The Role of Host Country Human Capital

dc.contributor.author	Goswami, Arti Grover
dc.date.accessioned	2013-04-25T16:28:24Z
dc.date.available	2013-04-25T16:28:24Z
dc.date.issued	2011-06-12
dc.description.abstract	The existing literature on offshoring neglects the importance of host country conditions in affecting the boundaries of a firm. In this paper, we focus on the role of the host country's human capital in affecting the organization of offshore production. Acknowledging that an input is produced offshore only after training the host labor, we propose that this training cost depends on the human capital gap between the home and the host country. Our model finds that a sourcing firm prefers to offshore production internationally only if the human capital gap between the home and the host country is below a threshold. Secondly, as the human capital gap increases, the probability for international outsourcing vis-à-vis intra-firm trade increases. Finally, as opposed to conventional wisdom, our model shows the possibility of outsourcing inputs of a high-tech good when the human capital gap between the home and the host is high.	en
dc.identifier.citation	The Journal of International Trade & Economic Development
dc.identifier.doi	10.1596/13270
dc.identifier.issn	0963-8199
dc.identifier.uri	https://hdl.handle.net/10986/13270
dc.language.iso	en_US
dc.publisher	Taylor and Francis
dc.relation.ispartofseries	The Journal of International Trade & Economic Development;21(4)
dc.relation.uri	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
dc.rights	CC BY-NC-ND 3.0 IGO
dc.rights.holder	World Bank
dc.rights.uri	http://creativecommons.org/licenses/by-nc-nd/3.0/igo/
dc.subject	outsourcing
dc.subject	foreign direct investment
dc.subject	training cost
dc.subject	human capital gap
dc.title	Vertical FDI versus Outsourcing : The Role of Host Country Human Capital	en
dc.type	Journal Article	en
dc.type	Article de journal	fr
dc.type	Artículo de revista	es
dspace.entity.type	Publication
okr.date.doiregistration	2025-05-06T11:30:57.801192Z
okr.doctype	Journal Article
okr.externalcontent	External Content
okr.globalpractice	Macroeconomics and Fiscal Management
okr.globalpractice	Trade and Competitiveness
okr.journal.nbpages	471-492
okr.language.supported	en
okr.peerreview	Academic Peer Review
okr.relation.associatedurl	http://www.tandfonline.com/doi/abs/10.1080/09638199.2010.497848
okr.theme	Financial and private sector development :: Other financial and private sector development
okr.theme	Human development :: Education for the knowledge economy
okr.topic	International Economics and Trade::Foreign Direct Investment
okr.topic	Macroeconomics and Economic Growth::Economic Theory & Research
okr.topic	Macroeconomics and Economic Growth::Knowledge Economy
okr.volume	21(4)
relation.isAuthorOfPublication	b51303b6-af29-592e-989d-eab9ca69edc9
relation.isAuthorOfPublication.latestForDiscovery	b51303b6-af29-592e-989d-eab9ca69edc9