Trading Tasks: A Simple Theory of Offshoring / Gene M. Grossman, Esteban Rossi-Hansberg.

Format:

Book

Author/Creator:

Grossman, Gene M.

Contributor:

National Bureau of Economic Research.

Rossi-Hansberg, Esteban.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12721.

NBER working paper series no. w12721

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Trading Tasks

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

For centuries, most international trade involved an exchange of complete goods. But, with recent improvements in transportation and communications technology, it increasingly entails different countries adding value to global supply chains, or what might be called "trade in tasks." We propose a new conceptualization of the global production process that focuses on tradable tasks and use it to study how falling costs of offshoring affect factor prices in the source country. We identify a productivity effect of task trade that benefits the factor whose tasks are more easily moved offshore. In the light of this effect, reductions in the cost of trading tasks can generate shared gains for all domestic factors, in contrast to the distributional conflict that typically results from reductions in the cost of trading goods.

Notes:

Print version record

December 2006.