Chinese Import Competition, Offshoring and Servitization

Grace Gu, Samreen Malik, Dario Pozzoli*, Vera Rocha

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

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.
Original languageEnglish
JournalEconomic Inquiry
Number of pages28
ISSN0095-2583
DOIs
Publication statusPublished - 20 Nov 2021

Bibliographical note

Epub ahead of print. Published online: 20 November 2021.

Keywords

  • Foreign competition
  • Offshoring
  • Servitization

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