TY  - JOUR
AU  - Feenstra,Robert C.
AU  - Spencer,Barbara J.
TI  - Contractual Versus Generic Outsourcing: The Role of Proximity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11885
PY  - 2005
Y2  - December 2005
UR  - http://www.nber.org/papers/w11885
L1  - http://www.nber.org/papers/w11885.pdf
N1  - Author contact info:
Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA  95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu

Barbara J. Spencer
University of British Columbia
Sauder School of Business
2053 Main Mall
Vancouver, BC  V6T 1Z2
CANADA
Tel: 604/822-8479
Fax: 604/822-8477
E-Mail: barbara.spencer@sauder.ubc.ca
AB  - We explore the relationship between proximity of buyers and sellers and the organizational form of outsourcing. Outsourcing can be "contractual" in which suppliers undertake specific investments or involve "generic" market transactions. Proximity expands the variety of products sourced through contracts abroad rather than at home, but the range of generic imports is unchanged. A higher-quality foreign workforce raises the variety of contractual trade, but at the expense of generics. We confirm these predictions using data for ordinary versus processing exports from Chinese provinces to destination markets and also the predictions of an extended model that allows for multinational production.
ER  -