Dynamic Aspects of Offshoring

Tasks

This project builds upon existing theoretical research on offshoring by taking a dynamic perspective and by allowing for uncertainty when exploring explanations and effects of offshoring. Dynamic models allow us to distinguishing between short-run and long-run consequences that derive from investments in research and development, physical capital, or education. Introducing uncertainty may explain offshoring as a means to deal with shocks to, and volatility of, productivity or demand. While relatively obvious to the practitioner, these lines of explanation have so far received very scant attention in the theoretical literature. Clearly, considering dynamic relationships and uncertainty also gives rise to novel policy implications related to offshoring. Hence, the project is also intended to address potential reasons for policy intervention in the area of international trade and investment.