Y2K and offshoring
Subtitle: the role of external economies and firm heterogeneity
By: Devashish Mitra, Priya Ranjan.
Contributors: Ranjan, Priya.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 11718.; Working paper series (National Bureau of Economic Research) -- working paper no. 11718.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 31
Subjects: Offshore assembly industry -- Econometric models; Year 2000 date conversion (Computer systems) -- Economic aspects
Description: "We construct a model of offshoring with externalities and firm heterogeneity.  Due to the presence of externalities, temporary shocks like the Y2K problem can have permanent effects, i.e., they can permanently raise the extent of offshoring in an industry.  Also, the initial advantage of a country as a potential host for outsourcing activities can create a lock in effect, whereby late movers have a comparative disadvantage.  Furthermore, the existence of firm heterogeneity along with externalities can help explain the dynamic process of offshoring, where the most productive firms offshore first and the others follow later.  Finally, we show the possibility of complementarity between two modes of offshoring: FDI and offshore outsourcing"--National Bureau of Economic Research web site.
Notes: "October 2005."

Includes bibliographical references (p. 28-31).

Also available in PDF from the NBER world wide web site (www.nber.org).