Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Economics

No 5-2021: Chinese Import Competition, Offshoring and Servitization

Grace Gu (), Samreen Malik (), Dario Pozzoli () and Vera Rocha ()
Additional contact information
Grace Gu: University of California Santa Cruz
Samreen Malik: New York University AD
Dario Pozzoli: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark
Vera Rocha: Department of Strategy and Innovation, Copenhagen Business School, Postal: Copenhagen Business School, Department of Strategy and Innovation , Kilevej 14A, DK-2000 Frederiksberg, Denmark

Abstract: This paper examines whether Chinese import competition increases the propensity for firms to offshore production or to cease any involvement in production by switching completely and permanently out of the manufacturing sector (servitization). Using a Danish employer-employee matched dataset covering a large sample of manufacturing firms over the 1995-2012 period, we find that import competition from China significantly increases offshoring but does not induce servitization. These findings are confirmed using various robustness tests as well as an analogous analysis of a Portuguese employer-employee matched dataset.

Keywords: Foreign competition; Offshoring; Servitization

JEL-codes: F12; F14; O31

39 pages, January 8, 2021

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