The economics of offshoring: Theory and evidence with appliocation Asia

This paper is a non-technical survey of the literature on offshoring and outsourcing, with special focus on the relevance of this literature for Asia. We first see how and to what extent this new literature helps us understand firms' tradeoffs between outsourcing and integration, the variation in the mixes of organizational forms and the location of outsourced activities. We also explore what plausibly triggers offshoring and thereafter what determines its dynamics. Finally, we draw inferences from the existing theory and empirical work about the developmental impact of offshoring on Asia, with special attention to issues related to inequality and poverty.