We propose a theory of the global production process that focuses on tradeable tasks, and use it to study how falling costs of offshoring affect factor prices in the source country. We identify a productivity effect of task trade that benefits the factor whose tasks are more easily moved offshore. In the light of this effect, reductions in the cost of trading tasks can generate shared gains for all domestic factors, in contrast to the distributional conflict that typically results from reductions in the cost of trading goods. (JEL F11, F16) The nature of international trade is changing. For centuries, trade mostly entailed an exchange of goods. Now it increasingly involves bits of value being added in many different locations, or what might be called trade in tasks. Revolutionary advances in transportation and communications technology have weakened the link between labor specialization and geographic concentration, making it increasingly viable to separate tasks in time and space. When instructions can be delivered instantaneously, components and unfinished goods can be moved quickly and cheaply, and the output of many tasks can be conveyed electronically, firms can take advantage of factor cost disparities in different countries without sacrificing the gains from specialization. The result

Abstract This paper provides an integrated view of globally engaged U.S. …rms by exploring a newly developed dataset that links U.S. international trade transactions to longitudinal data on U.S. enterprises. These data permit examination of a number of new dimensions of …rm activity, including how many products …rms trade, how many countries …rms trade with, the characteristics of those countries, the concentration of trade across …rms, whether …rms transact at arms length or with related parties, and whether …rms import as well as export. Firms that trade goods play an important role in the U.S., employing more than a third of the U.S. workforce. We …nd that the most globally engaged U.S. …rms, i.e. those that both export to and import from related parties, dominate U.S. trade ‡ows and employment at trading …rms. We also …nd that …rms that begin trading between 1993 and 2000 experience especially rapid employment growth and are a major force in overall job creation.

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Plant shutdowns shape industry productivity, the dynamics of employment, and industrial restructuring. Plant closures account for more than half of gross job destruction in US manufacturing. This paper examines the effects of firm structure on US manufacturing plant closures. Plants belonging to multi-plant firms and those owned by US multinationals are less likely to exit. However, the superior survival chances are due to the characteristics of the plants rather than the nature of the firms. Controlling for plant and industry attributes, we find that plants owned by multi-unit firms and US multinationals are much more likely to close.

Abstract. Comparative advantage, whether driven by technology or factor endowment, is at the core of neoclassical trade theory. Using tools from the mathematics of comple-mentarity, this paper o¤ers a simple, yet unifying perspective on the fundamental forces that shape comparative advantage. The main results characterize su ¢ cient conditions on the primitives of the model factor productivity and factor supply to predict patterns of international specialization in economies with an arbitrarily large number of countries, goods, and factors. These conditions generalize and extend many results from the previous trade literature. They also o¤er new insights about the joint e¤ects of technology and factor endowments on international specialization.

ABSTRACT: Using data on U.S. intra-firm and arm’s-length imports for 5,423 products and 210 countries, we examine the determinants of the share of U.S. imports that are intra-firm. Three determinants of this share have been proposed: (1) Antràs (2003) focuses on the share of inputs provided by the headquarter firm. We provide added confirmation and further strengthen the empirical findings in Antràs (2003) and Yeaple (2006). (2) In a model featuring heterogeneous productivities, Antràs and Helpman (2004) focus on the interaction between the firm’s productivity level and the headquarter’s input share. We find very strong support for this determinant. (3) Antràs and Helpman (2006) add to this the possibility of partially incomplete contracting. We find that consistent with the novel prediction of their model, improved contracting of the supplier’s inputs can increase the share of U.S. imports that are intra-firm. In short, the data bear out the primary predictions of this class of models about the share of U.S. imports that is intra-firm trade.

Europe is reorganizing its international value chain. I document these changes in Europe’s interna-tional organization of production with new survey data of Austrian and German firms investing in Eastern Europe. I show estimates of the share of intra-firm trade between Austria and Germany on the one hand and Eastern Europe on the other. Furthermore, I present empirical evidence of the drivers of the new division of labor in Europe. I find among other things that falling trade costs and falling cor-ruption levels as well as improvements in the contracting environment in Eastern Europe are affecting the level of intra-firm imports from Eastern Europe. They are also favoring outsourcing over offshor-ing. Low organizational costs of hierarchies and large costs of hold-up (when there are no alternative investors in Old Europe or no alternative suppliers in Eastern Europe) are favoring offshoring over outsourcing. Tax holidays granted by host countries in Eastern Europe also mildly affect the organiza-

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We develop an assignment theory to analyze the volume and composition of foreign direct investment (FDI). Firms conduct FDI by either engaging in greenfield investment or in cross-border acquisitions. Cross-border acquisitions involve firms trading heterogeneous corporate assets to exploit complementarities, while greenfield FDI involves building a new plant in the foreign market. In equilibrium, greenfield FDI and cross-border acquisitions co-exist within the same industry, but the composition of FDI between these modes varies with firm and country characteristics. Firms engaging in greenfield investment are system-atically more efficient than those engaging in cross-border acquisitions. Furthermore, most FDI takes the form of cross-border acquisitions when production-cost differences between countries are small, while greenfield investment plays a more important role for FDI from high-cost into low-cost countries. These results capture important features of the data.

The seemingly unlimited availability of science and engineering (S&E) talent in emerging economies and the increasing difficulties of finding such talent in advanced economies have given rise to a new trend: the global sourcing of S&E talent. This paper examines the antecedents and dynamics of this trend. In particular, it examines the coevolution of macroeconomic forces, domestic and offshore national policies, industry dynamics, and firm-level offshoring capabilities driving today’s offshoring decisions. The analysis exploits findings from the Offshoring Research Network (ORN) project. By taking a dynamic and multilevel perspective on next-generation offshoring, this paper may inform both firm-level strategies and national policy-making. The disintermediation of business processes, information technology applications, and administrative and back office functions through offshoring is rapidly becoming an accepted mainstream business practice (UNCTAD, 2005). Offshoring refers to the process of sourcing any business task, process, or function supporting domestic and global operations from abroad, in particular from lower cost emerging economies. In recent years, two important trends have emerged. For a growing number of companies, reducing labor costs is no longer the only strategic driver behind offshoring decisions. Accessing pools of highly The authors wish to thank Associate Editor Timothy Devinney for his editorial guidance and four anonymous reviewers for their encouragement and insightful suggestions. skilled talent around the world (Bunyaratavej et