International Outsourcing Through Foreign Direct Investment And Intellectual Property Protection
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Overview: Outsourcing process is decomposed to two steps - choosing production location and shipping products back to home country. Outsourcing is measured as the ratio of affiliate sales over US parent sales. Based on cost comparison, factors that affect production cost and factors that affect trade cost both matter. Improved Intellectual Property Protection (IPP) increases outsourcing by reducing the effective cost of skilled labor and by strengthening the impact of R&D. This paper published by University of Colorado at Boulder studies international outsourcing through Foreign Direct Investment (FDI) by Multinational Enterprise (MNE).