Last year Nokia gave up it’s plant in Bochum, building a new factory in Romania at the same time. This obvious process of offshoring (in this case Foreign Direct Investment) is only one evidence for the growing international fragmentation of production chains. But what are the results of this processes? The first answer might be clear: Offshoring firms do reduce their domestic employment. However, there are at least three German economists from the University of Mainz who argue that positive productivity effects of offshoring dominate possible downsizing effects, with the surprising result that domestic employment also raise.
Read full article: The plant-level employment effect of offshoring. Evidence from Germany.
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