International industry migration and firm characteristics: some evidence from the analysis of firm data

Abstract

This article examines firm characteristics associated with the probability of relocating part of the activity in a foreign country. Using manufacturing firms’ micro data for the 1999-2005 period, we find evidence that cost-cutting objectives are the main determinants for offshoring production, that firms with lower profits are more likely to undertake in-house offshoring, and that imports from low-wage countries increase the likelihood that part of the activity will be relocated. We also find that most offshoring firms are foreign – nearly 76% of the total.