We construct a model of offshoring with externalities and firm heterogeneity. Due to the presence of externalities …, temporary shocks like the Y2K problem can have permanent effects, i.e., they can permanently raise the extent of offshoring in … an industry. Also, the initial advantage of a country as a potential host for outsourcing activities can create a lock in …

. -- multinational firms ; outsourcing ; intra-firm trade ; offshoring ; vertical FDI …

outsourcing activities, the increased flow of direct foreign investment and its heterogeneous regional distribution, the increased … investment ; globalization ; outsourcing ; technology ; capability ; energy ; trade flows ; inequality and poverty ; technology …