Rise, Rule, and Graduation: A Study of U.S. Manufacturing Offshoring to China from 1990 to 2016

• Main Author: Deshpande, Pallavi
• Format: Others
• Published: Scholarship @ Claremont 2019
• Subjects: Offshoring; Manufacturing; China; trade; productivity; quantitative; Economics; Growth and Development; International Economics; Macroeconomics
• Online Access: https://scholarship.claremont.edu/cmc_theses/2180; https://scholarship.claremont.edu/cgi/viewcontent.cgi?article=3265&context=cmc_theses

Despite the abundance of theoretical literature on and qualitative analyses of relocating manufacturing production, consequences of offshoring on labor markets, and foreign trade policy, very little empirical analysis has been conducted in order to examine the trends and patterns in economic variables that led to the rise in manufacturing offshoring in the first place. Focusing on the U.S. manufacturing offshoring to China, this thesis uses a comprehensive dataset of labor compensation costs and labor productivity for 20 manufacturing industries across 27 years for China and the United States to investigate the relationship between U.S. offshoring and productivity per wage for a unit of labor (α) in China vis-a-vis the U.S. I find that the effect of α on growth in offshoring across industries is not only positive but also statistically significant. Further, this thesis also attempts to combine empirical findings with a qualitative analysis of the prominent trends in the data that might help understand the S-shape of the offshoring curve over three periods (or states of the curve): rise (1990-1999), rule (2000-2008), and graduation (2009-2016).