1 / 24

Quantifying the productivity counterpart of outsourcing in the Italian manufacturing industries

Quantifying the productivity counterpart of outsourcing in the Italian manufacturing industries. F. Daveri - M. Iommi - C. Jona-Lasinio OECD Productivity Workshop Bern, 16-18 October, 2006. Motivation. Growing importance of international “outsourcing” of services in Western economies.

milos
Download Presentation

Quantifying the productivity counterpart of outsourcing in the Italian manufacturing industries

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Quantifying the productivity counterpart of outsourcing in the Italian manufacturing industries F. Daveri - M. Iommi - C. Jona-Lasinio OECD Productivity Workshop Bern, 16-18 October, 2006

  2. Motivation • Growing importance of international “outsourcing” of services in Western economies. • Evidence that both offshoring of services and of material inputs are associated with productivity gains • Amiti and Wei, 2006; Girma and Gorg, 2004; Criscuolo and Leaver, 2005. • Outsourcing as such, irrespective of where to, should be associated to productivity growth • Italy was largely missing from previous research on this topic. • Availability of new symmetric I-O tables.

  3. Our aims • Quantify the extent of domestic and international outsourcing in the Italian manufacturing sector. • Provide a comparison between direct and indirect measures of outsourcing. • Evaluate the productivity counterpart of outsourcing.

  4. Data • Symmetric input-output tables (industry by industry matrix) • At the 60-sector level (according to the NACE Rev1.1 classification) • Time period: 1995-2003 • Focus on domestic and international outsourcing of manufacturing intermediates and services for 14 manufacturing industries • Our – broad - definition of “market service providers”: • transports, storage and communications • finance and insurance • real estate and other business services

  5. LP in manufacturing: abrupt but scattered slowdown (ND first, then D)

  6. TFP in manufacturing: same pattern as LP

  7. Measures of international and domestic outsourcing • OSMiD= Sj [DOMESTIC INPUT PURCHASES OF MATERIAL j by IND. i / TOTAL NON-ENERGY INPUTS USED BY INDUSTRY i] • OSSiD= Sj [DOMESTIC PURCHASES OF SERVICE INPUT j by INDST. i / TOTAL NON-ENERGY INPUTS USED BY INDUSTRY i] • OSMiF= Sj [IMPORT OF MATERIAL j by INDST. i / TOTAL NON-ENERGY INPUTS USED BY INDUSTRY i] • OSSiF= Sj [IMPORT OF SERVICE INPUT j by INDST. i / TOTAL NON-ENERGY INPUTS USED BY INDUSTRY i]

  8. Domestic outsourcing of intermediates (OSMD): down in 1995-03

  9. Int’n’l outsourcing of intermediates (OSMF): up in 1995-03

  10. Domestic outsourcing of services (OSSD): up in 1995-03

  11. Int’n’l outsourcing of services (OSSF): mildly up in 1995-03

  12. DIJ vs FH measures • FH measure imputes average propensity to import for the economy to each industry – unwarranted assumption justifed by data limitations • We have the right data to directly compute offshoring • FH and DIJ measures are highly correlated: • Across industries r is 0.8 on average 1995-03 (but falls to .6 in 1999-03) • FH shares systematically lower than DIJ shares • Feenstra-Hanson measures systematically “optimistic” in evaluating extent of offshoring • Use of indirect outsourcing measures may bias estimates

  13. Empirical specification • where: • GROWTHLPit is the growth rate of value added per full-time equivalent employed worker in industry i (with i=1,..14) at time t (with t=1995,..,2003); • GROWTHKLitis the growth rate of the industry capital labor ratios; • OSS is the outsourcing of services; • OSM is the outsourcing of intermediates • “d” and “f” mean “domestic” and “foreign”

  14. Empirical results

  15. Conclusions and future research • Not all manufacturing industries outsource production to the same extent either inside or outside the country; • Off-shore outsourcing took off in 1999-2003, not before; • Only the international outsourcing of intermediates is positively related to productivity growth, while the other forms of outsourcing are not robustly related to productivity growth

  16. Conclusions and future research • Direct and indirect measures of outsourcing provide different empirical results • The results obtained from our indicator of outsourcing are quite different from those arising from the commonly used Feenstra-Hanson measures of outsourcing

  17. Conclusions and future research • Disaggregate market services further • Potential to do so: I-O Table available with up to 101 industries • Improve econometric techniques to more satisfactorily deal with endogeneity issues

  18. Backup Slides

  19. FH vs DIJ: OSM

  20. FH vs DIJ: OSS

  21. FH measure of service outsourcing

  22. SYMMETRIC I-O TABLES Imported intermediates Total intermediates Domestic intermediates

  23. SYMMETRIC I-O TABLES costi di produzione interna sostenuti dalla branca agricoltura per acquistare prodotti agricoli necessari per la sua produzione di prodotti agricoli, prodotti industriali e servizi costi di produzione interna sostenuti dalla branca agricoltura per acquistare prodotti industriali necessari per la sua produzione di prodotti agricoli, prodotti industriali e servizi Domestic use

  24. SYMMETRIC I-O TABLES Imported use I.P.I. I.I.C. Supply

More Related