Heterogeneous Globalization: Offshoring and Reorganization

This paper uses a unique offshoring survey to show that firms import the same goods they manufacture at home after they relocate production to low-wage countries. Instead of ceasing domestic production, offshorers produce higher-priced domestic varieties and increase both the shares and levels of their employment in innovation-related occupations. These responses highlight an under-explored aspect of globalization: the opportunity to offshore production of low-end varieties and focus domestic activities on the development, production, and marketing of high-quality or technologically advanced versions.