Mirabelle Muûls, Imperial College London

Department seminar. Mirabelle Muûls is an Assistant Professor in Economics at the Imperial College London. She will present a paper entitled "International outsourcing, offshoring, and the direction of firm innovation", co-authored by Antoine Dechezleprêtre, Damien Dussaux, and David Hemous.

Photo of Mirabelle Muûls

Mirabelle Muûls. Photo: Imperial College London.

Abstract:

We examine the impact of outsourcing and offshoring on firms’ propensity to engage in input-reducing innovation and product innovation using a panel dataset that combines firm-level international trade data with self-reported innovation data for around 8,000 French companies observed from 1998 to 2010. We present the first evidence showing that trade significantly affects the direction of technological change at the firm level. Consistent with our model, we find that (i) international outsourcing and offshoring increase firms’ propensity to develop new products; (ii) offshoring of labour-intensive intermediate goods reduces the propensity to carry out labour-saving innovation; and (iii) an decrease in the import price index of materials reduces the propensity to carry out material-saving innovation. The results are robust to various sensitivity tests and estimation strategies that exploit exogenous variation in exchange rates to instrument for offshoring and outsourcing. Our findings suggest that trade with low-cost countries has significantly impacted the direction of firms’ innovation in developed countries over the past 20 years.

Host: Geir B. Asheim

Published Feb. 14, 2017 4:26 PM - Last modified Apr. 18, 2017 10:52 AM