In the early 1990s, trade and labor economists, noting the fall in wages for low-skilled workers relative to high-skilled workers, began to debate the impact of trade on wages. This debate—which led to a sometimes heated exchange on the role of trade versus the role of technological change in explaining wage movements—continues today, with the focus now shifting to workers in the middle of the wage distribution. In Offshoring in the Global Economy, noted economist Robert Feenstra offers a synthesis of fifteen years of research—linking his own work to related research by others—on the globalization of production and its relation to wage movements.
Feenstra first contrasts the views of trade economists Paul Krugman and Edward Leamer, who both relied (to different ends) on the Heckscher–Ohlin model. He then examines the new type of trade model whereby the production processes transfer across countries. Feenstra suggests a new calculation of the factor content of trade that demonstrates the durability of the Heckscher–Ohlin model.
Feenstra examines as well the impacts of business cycle volatility, prices, and productivity on the macroeconomics of offshoring. In a concluding chapter, he addresses the broader implications of both empirical and theoretical work on offshoring and suggests directions for future research.
Ohlin Lectures series
About the Author
Robert C. Feenstra is Professor of Economics and C. Bryan Cameron Distinguished Chair in International Economics at the University of California, Davis. He directs the International Trade and Investment Program at the NBER and is the author of Advanced International Trade: Theory and Evidence and Offshoring in the Global Economy: Microeconomic Structure and Macroeconomic Implications (MIT Press, 2010).
"The author of the leading graduate textbook in International Trade has done it again! In this book, Robert Feenstra offers an accessible and essential overview of recent developments in the understanding of the process of offshoring. Students and practitioners alike will benefit from his insightful review of both his pioneering work on the topic as well as the work of other important contributors to this literature."
Pol Antras, Department of Economics, Harvard University
"Robert Feenstra's well-deserved reputation for effectively combining innovative theory with well-organized data analysis is on display in this book, which describes his important contributions to the theory and evidence of offshoring and also summarizes the substantial recent literature. This is a welcome addition to the offshoring debate."
Edward E. Leamer, Chauncey J. Medberry Professor of Management, and Director, UCLA Anderson Forecast
"Robert Feenstra has been a pioneer in the economic analysis of offshoring. His Ohlin lectures provide an elegant synthesis of how economists think about the globalization of production, tracing its effects on the structure of wages, the factor context of trade, the measurement of productivity, and the volatility of the macroeconomy. This volume is essential reading for scholars and policy analysts with an interest in how international trade transforms market economies."
Gordon Hanson, School of International Relations and Pacific Studies, University of California, San Diego