Publication Type
Master Thesis
Version
publishedVersion
Publication Date
2006
Abstract
This paper studies decision of whether outsourcing or localization in China. Both strategies can enjoy low wage advantage. But outsourcing induces processing trade, while localization, which has additional localization cost can turn processing trade of some goods to ordinary trade. The asymmetric effect lies on that once localized, it is hard to return to outsourcing due to competition or fixed expenditures involved. If wage difference larger, it is more preferable to localized. Therefore, we can expect asymmetric effect of processing trade due to movement of relative wage difference, which was proved by econometrics on recent data by cointegrating analysis within a VECM model.
Keywords
Cointegration, Outsourcing, Processing Trade, REER
Degree Awarded
MSc in Economics
Discipline
Labor Economics
Supervisor(s)
HOON, Hian Teck
Publisher
Singapore Management University
City or Country
Singapore
Citation
XING, Zhaopeng.
Asymmetry of Processing Trade in China : Theory and Empirics. (2006).
Available at: https://ink.library.smu.edu.sg/etd_coll/6
Copyright Owner and License
Author
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.