Vertical Foreign Direct Investment versus Outsourcing: A Welfare Comparison from the Perspective of a Host Country
In the offshoring literature, there is a huge disconnect between the alternative modes of organizing offshore production and their relative welfare impact on a host country. We bridge this gap by comparing the welfare of a host country from vertical foreign direct investment (VFDI) vis-a-vis international outsourcing. Our model finds that the ability to maximize welfare in the alternative modes of organizing offshore production is contingent on the absorptive capacity of the host country. If a host country's absorptive capacity is above a critical threshold, outsourcing is more welfare enhancing vis-a-vis VFDI; while even with an absorptive capacity lower than this critical threshold, outsourcing being welfare improving over VFDI cannot be ruled out.
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Format: | Journal Article biblioteca |
Language: | EN |
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2011
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Subjects: | Multinational Firms, International Business F230, Contracting Out, Joint Ventures, Technology Licensing L240, |
Online Access: | http://hdl.handle.net/10986/5793 |
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dig-okr-1098657932021-04-23T14:02:23Z Vertical Foreign Direct Investment versus Outsourcing: A Welfare Comparison from the Perspective of a Host Country Goswami, Arti Grover Multinational Firms International Business F230 Contracting Out Joint Ventures Technology Licensing L240 In the offshoring literature, there is a huge disconnect between the alternative modes of organizing offshore production and their relative welfare impact on a host country. We bridge this gap by comparing the welfare of a host country from vertical foreign direct investment (VFDI) vis-a-vis international outsourcing. Our model finds that the ability to maximize welfare in the alternative modes of organizing offshore production is contingent on the absorptive capacity of the host country. If a host country's absorptive capacity is above a critical threshold, outsourcing is more welfare enhancing vis-a-vis VFDI; while even with an absorptive capacity lower than this critical threshold, outsourcing being welfare improving over VFDI cannot be ruled out. 2012-03-30T07:34:34Z 2012-03-30T07:34:34Z 2011 Journal Article Review of Development Economics 13636669 http://hdl.handle.net/10986/5793 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article |
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Multinational Firms International Business F230 Contracting Out Joint Ventures Technology Licensing L240 Multinational Firms International Business F230 Contracting Out Joint Ventures Technology Licensing L240 |
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Multinational Firms International Business F230 Contracting Out Joint Ventures Technology Licensing L240 Multinational Firms International Business F230 Contracting Out Joint Ventures Technology Licensing L240 Goswami, Arti Grover Vertical Foreign Direct Investment versus Outsourcing: A Welfare Comparison from the Perspective of a Host Country |
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In the offshoring literature, there is a huge disconnect between the alternative modes of organizing offshore production and their relative welfare impact on a host country. We bridge this gap by comparing the welfare of a host country from vertical foreign direct investment (VFDI) vis-a-vis international outsourcing. Our model finds that the ability to maximize welfare in the alternative modes of organizing offshore production is contingent on the absorptive capacity of the host country. If a host country's absorptive capacity is above a critical threshold, outsourcing is more welfare enhancing vis-a-vis VFDI; while even with an absorptive capacity lower than this critical threshold, outsourcing being welfare improving over VFDI cannot be ruled out. |
format |
Journal Article |
topic_facet |
Multinational Firms International Business F230 Contracting Out Joint Ventures Technology Licensing L240 |
author |
Goswami, Arti Grover |
author_facet |
Goswami, Arti Grover |
author_sort |
Goswami, Arti Grover |
title |
Vertical Foreign Direct Investment versus Outsourcing: A Welfare Comparison from the Perspective of a Host Country |
title_short |
Vertical Foreign Direct Investment versus Outsourcing: A Welfare Comparison from the Perspective of a Host Country |
title_full |
Vertical Foreign Direct Investment versus Outsourcing: A Welfare Comparison from the Perspective of a Host Country |
title_fullStr |
Vertical Foreign Direct Investment versus Outsourcing: A Welfare Comparison from the Perspective of a Host Country |
title_full_unstemmed |
Vertical Foreign Direct Investment versus Outsourcing: A Welfare Comparison from the Perspective of a Host Country |
title_sort |
vertical foreign direct investment versus outsourcing: a welfare comparison from the perspective of a host country |
publishDate |
2011 |
url |
http://hdl.handle.net/10986/5793 |
work_keys_str_mv |
AT goswamiartigrover verticalforeigndirectinvestmentversusoutsourcingawelfarecomparisonfromtheperspectiveofahostcountry |
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1756571660897484800 |