Trading Tasks: A Simple Theory of Offshoring

摘要: The nature of international trade is changing. For centuries, mostly entailed an exchange goods . Now it increasingly involves bits value being added in many different locations, or what might be called tasks Revolutionary advances transportation and communications technology have weakened the link between labor specialization geographic concentration, making viable to separate time space. When instructions can delivered instantaneously, components unfinished moved quickly cheaply, output conveyed electronically, firms take advantage factor cost disparities countries without sacrificing gains from specialization. result has been a boom “offshoring” both manufacturing other business functions. 1 In this paper, we develop simple tractable model offshoring based on able tasks. We conceptualize production terms that must performed by each production. A firm perform continuum required for realization its product either close proximity headquarters at offshore location. Offshoring may attractive, if some factors hired more cheaply abroad than home, but also costly, because remote performance task limits opportunities monitoring coordinating workers. 2 To capture aspect reality, our features heterogeneous costs various industry, choose organization