To Örebro University

This paper analyses the relationship between offshoring of services and total factor productivity across three different OECD countries: Ireland, Sweden and the United Kingdom. Offshoring activity is widely believed to play an important role for firm productivity due to the fragmentation of the production process across countries when there are differences in the relative endowments of skilled and unskilled labour and of technology. The paper firstly shows that offshoring firms tend to be more labour productive, are larger, pay higher wages and are more likely to be multinational and foreign-owned. Secondly, there appears to be some suggestive evidence of a positive relationship between offshoring and firm productivity although the statistical and/or economic significance of this relationship is not very strong across the three countries. One possible explanation is the small time horizon over which our analysis span.