The impact of offshoring on home country’s employment

Abstract

Although not a recent phenomenon, offshoring has assumed increasing importance in terms of multinational enterprises’ activities, often being the subject of discussion at the political level, especially in more economically developed countries, which tend to suggest that this phenomenon underlies the poor performance of job creation in these economies, contributing to the relocation of jobs. Despite the increasingly numerous and comprehensive studies, findings insist on presenting rather different ideas concerning the effects on home countries’ employment. Therefore, taking into account the lack of relevant work in this area focused on the Portuguese reality, it is pertinent to bridge this gap, positively contributing to the enrichment of the existing literature and to a better understanding of the effects of offshoring on employment in Portugal. Based on a sample of 14 sectors of the manufacturing industry during the 1995-2009 period, our results suggest that offshoring has a positive but small impact on home country’s employment in the Portuguese case. This result may indicate that due to higher sales induced by productivity gains from offshoring, this contributes to the creation of a greater number of jobs than those who are relocated abroad.