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Chinese import competition, offshoring and servitization
Author(s) -
Gu Grace,
Malik Samreen,
Pozzoli Dario,
Rocha Vera
Publication year - 2022
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.13055
Subject(s) - offshoring , competition (biology) , business , industrial organization , production (economics) , china , portuguese , manufacturing , tertiary sector of the economy , economics , outsourcing , labour economics , marketing , microeconomics , ecology , linguistics , philosophy , political science , law , biology
Abstract We study how domestic firms adapt to increased import competition from China. Using a Danish employer‐employee matched dataset covering firms over the 1995–2007 period, we find that import competition significantly increases manufacturing firms' expansion of their business activities in the service industry (partial servitization); their probability of offshoring production activities abroad and of exiting the market. Import competition, however, does not induce firms to cease all of their involvement in manufacturing production by completely switching into service sector (complete servitization). These findings are confirmed using various robustness tests as well as an analogous analysis of a Portuguese employer‐employee matched dataset.