国际经济与贸易 外文翻译

目录

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2 外文文献译文 (6)

3外文文献原文 (12)

外文文献译文

总结：

在最近的这几年来，贸易自由化对于国内的影响一直受到严密的监控。贸易自由化和全球化的其它方面被指责成造成美国的收入不均和欧洲的失业率的根本原因。问题的关键还在于低工资发展中国家的贸易。虽然经济学家一直都在研究这个问题,但是却并没有找到明确的答案。本文探讨了这种模棱两可的问题的一些原因。内生性和同时性虽然可以产生主要的问题，但这引起业内人士指责，还是应该应该适当地归因于其他因素的发展。但是即使仅仅针对贸易自身，它也有不能确定的影响。这只是在最简单的赫克歇尔-俄林理论下,批评者对贸易自由化可以预测的明确结果。

1介绍

在最近几年来，贸易和经济开放一直在增长,于是各个利益集团的获利影响一直被争论。低技能工人的工资和薪水在因为全球化可能引起的潜在后果，受到特别的关注。由于工业化国家与发展中低薪水国家的贸易份额得到增加，导致这场争论已经愈演愈烈。在美国以及欧洲，人们对于工作，工资和生活标准时刻处于风险当中而感到恐惧的情况普遍存在，尤其是在和那些从底薪国家来的工人直接与直接竞争的地区尤为严重。

在经济学家中，争论集中在美国收入显著不平等的兴起和欧洲的失业率持续增加引起的贸易和技术变革的相对贡献。贸易经济学家们倾向于应该减少在这些发达国家的交易规则，而大量的劳动经济学家则抱持着相反的意见。尽管这场争论远远没有解决争端,但是它在理论和实证两个方面揭示了极其复杂的问题。

第二节列出了基本问题以及在所有商品自由流通的基础上交易的两个产品-三个要素模型对工资和就业影响的后果。第三节部分认为最终产品就是非流通股，但它的一些部件和组件可以流通，从而可以从境外进行采购。境外采购可能涉及海上生产和对外直接投资。第四节探讨了资本流动的影响。第五部分在讲述潜在的失业问题。第六节提供了一些结论性的意见。

2海外采购和相对工资

传统贸易理论的奠基石之一是在因素比例在测定专业化和贸易时的作用。跨国的要素禀赋的多样性和跨产品的因素强度在比较优势的评定中占有很重要的位置。当这些原则被应用在同水平的产品时，它很容易证明，贸易自由化在被利用于生产与进口货品对抗的货物时将减少要素的相对回报。在当今的发达国家的进口品竞争的商品在往往是相

对密集性非技能和半技能劳动。如果贸易自由化增加了高劳力低工资国家的进口品流入国内市场的数量，那么斯托尔珀萨缪尔森定理可以预测工作和工资水平将会受到来自进口货物行业压力。压力还会蔓延到经济的其他领域。里默理论(1998)是一个解决这个问题的极好的参考应用方法。

然而，产品进入国际贸易市场，特别是非常复杂的商品，由许多部件和组件组成的商品。在过去，生产这样的产品的方式是，无论这个产品的组成有多少，都是由同一个国家全部生产完成。当然，外购零部件是被广泛使用，但它本质上还是更倾向于国内化，主要是因为在配备的成本急剧上升时，外包才被推出国界。因此出现了一种趋势，就是使产品生产超过了国界可能使得它被贴上“奥地利制造”或“美国制造”的标签。

近年来，交通运输和通信技术的重大创新成果在使跨境合作所需要的成本大幅降低，也使海外设厂和生产这种模式获得了极度迅速的成长。不仅贸易自由化对这种发展提供了帮助，而且世界各地的直接投资流动和人才，信息以及技术流而导致的更开放的经济也使这种发展得到提升。

因此，许多产品迅速失去他们国产的身份因为跨国生产和其他从海外采购和制造的零件、部件和组装。从看他们决定到哪里去采购、生产、装配，厂商最关注的就是协调以及产品的生产成本。不难发现在在产品零部件和组装过程中，要素禀赋和要素密集度在国家之间的竞争中扮演了一个重要的角色。

要素密集度往往会使一个复杂的生产过程中的构成活动变得不经相同。正如传统贸易理论所强调的，最终产品的因素强度是相关的组件因子强度的加权平均。在组件级别的评价比较优势，是不是从最终产品这样做非常不同。从要素禀赋理论的观点来看，资源丰富高工资的国家会把大多数要求较高的资本技术密集型产品部件给大量的熟手技

工制造，要求较低产品和部件则会往半技能或非技能劳动力投入更多。

这意味着这个国家可以提高这个最终产品的市场竞争力，通过把这个产品的组件外包到劳动密集型低薪水国家。在图一显示了这个想法的重点。1.这里有两种产品，X和Y，以及其他三个因素，资本(K)，技能劳动力(H)，技能劳动力是由h表现的，和普通劳动力(L)组成的，而普通劳动力是由w表现的。现在假设资金是固定的并且在特定的区域内，而这两种类型的劳动力在部门之间都是完全自由移动的。这两种产品也假设是完全自由交易的。在发达国家和发展中国家之间的贸易，产品X是高工资国家的进口产品和产品Y是它的出口产品。

曲线X o和Y o分别代表这两种产品的单位价值的等产量线。在斯托尔帕- 萨缪尔森的框架里，贸易自由化所带来的X的价格下降，画出位移后的X-等产量线出来。随后的生产要素价格的调整，以这种商品相对价格的变化，得出一个平坦的W / H比值，与新的X等产量线相切（未画出）和最初的Y-等产量线。这场争论的核心就是非技能劳动力的地位的削弱。

如果产品X的生产技术得到改进，它将移动X-等产量线向内移动(未显示),使要素价格率更陡，从而提高非技能劳动力的相对位置。因此，如果贸易自由化与技术改革在与进口产品竞争的行业同时进行，非技能劳动力的相对地位可能改善，恶化或保持不变。

在Y-区域的技术进步使Y-等产量线向内位移（未显示），从而降低非技能劳动力的位置。因此，随着进口带来了国家出口部门的科技进步的经济贸易自由化，加强了彼此对劳动力立场的恶化。在这里，开放程度和贸易的增加会带来劳动力收入状况的恶化，但是这对政府政策去了解相关两个来源的贡献是很重要的。

当我们允许零部件之间贸易后，这个问题变得更为复杂的问题。例如，假设每个最终产品是由两个部分组成的。让X产品包括组件的x和y射线通过点，代表扩张之路给人的扩张之路的斜坡要素价格比W / H，和射线AB x分量Y（未画出）。这是最终产品的要素，X代表的扩张之路，沿射线0X强度因子强度的两个组成部分的加权平均。色差x显然是相对资本密集型的组件。

当运输和协调成本花费如此高而贸易壁垒也充满了限制性，这个国家就会将国内的行业分成两个组成部分。这种类型的综合生产是模仿许多战后时期的大多数商品生产的规则。然而,在最近几年,关税的减少和非关税壁垒,以及在运输及通信等方面的创新使海上采购和海上生产的成本大幅减少。因此，无论是出口和与进口货对抗的行业都正在日益广泛采用海外采购和生产的组件，也在境外进行组装。如飞机制造商波音和空中客车以及许多在边境加工的行业都是这个现象的例子。

假设在图1的情况下，清除上述障碍降低海外采购配件x2的成本到国内的生产经济变得无利可图的地步。在X行业继续在国内生产零部件x1并组装产品，但是它把零部件x2的来源改成从国外进口。简答的假设它用出口x1去支付进口x2的费用。

如果这种生产改革降低产品X的资源成本，就表示在新条件下的等产量线的集合会向左下角位移。假设单位价值的等产量线代表x11给出的新成本条件，使技能与非技能的劳动力的数量用一些点表示要求生产足够的x1的数量，并保持原有的x1的生产资金。

另外还要加上x1出口的数量作为进口x2的抵消，构成初始要素价格率w/h。

如果是一个小国家，成品的价格在世界市场上是不受这些变化的影响的，这意味着要素价格率，即w/h，不是一个平衡的比率。平衡比率必须是原来的Y型等产量线，Y0和新X型等产量线X11。那个要素价格率，这里并没有画出来，会明显比初始要素价格率w/h更陡，这意味着非技能工人的相对工资的提高。

在这里，我们需要一个更复杂的过程。我们看见图上面显示，如果产品X的价格降低了，那么最终产品的贸易自由化将X等产量线移出，转变原来对非技能劳动力的要素价格。但如果贸易自由化延伸到组件，或者如果降低成本促进海外采购技术变化，那么从这个等产量线压力源会运行在相反的方向。数量和贸易格局将会改变，而相对工资会上涨，下跌或者是保持不变。在这里，简易的斯托尔帕-萨缪尔森理论显然被打破了。

2.1成分专业化技术密集型产业

如果组件专业化是发生在技术密集型行业，产品Y将在这个相对处于劣势的国家里再一次成为相对劳动力密集型的组件。这将通过线段的斜率cd得出组件y2的扩展线。在一定意义上海外采购的影响，然后进行对以前类似案例的分析，给出了新的单位价值等产量Y11，再次要在要素价格比率上做一个调整。然而，与以往的情况不同，新的平衡要素价格率，必须要和等产量线Y11相切于x o，比原来的更平坦，因此这暗示着非技能工人的工资将会下降。

2.2就业和商品输出的影响

假设在经济情况允许得到了全部就业的条件下，当要素价格率会从就业和输出这两个方向的任何一个地方，那么海外采购部门就会得到增加而削减其他部门。从图2得出调整后的基本特征，初始平衡点设在无差异曲线I O上的Q o和C o两点。Pw是世界价格比率而Pd国内关税包容相对价格。海外采购的效果与那些相关的技术改进有类似的效果，即扩大生产可能性曲线沿主轴的行业。因此，这两个控制板上制造都转移到Q1。在图2a中，采用海上采购的国家中，与进口商品竞争的行业，X产品的输入增加而Y 产品输入减少（在Q1）。在图2b中，采用海上采购的国家中的出口行业，Y产品的输入增加而X产品输入。

国家利润因为产品Y行业通过海外采购而得到明显的增加，但是它的效果是不明显的因为它发生在与进口货对抗的行业。有数据显示国家利润顺着消耗量下降的时候，点C o会移动到C1。但这并不是唯一可能发生的结果。通过固定的国内价格比率，Pd，猜

想到这包含关税价格是一个较小的关税的结果比以前更适用于世界价格也比以前减少了。画得较陡的世界价格线（没有画出）是在图2中用一条线通过点Q o和Q1，画的这条线会因为角度变得更陡使自己也变得更陡，直到世界价格线穿过点Q o但是还没超过Q1，而不是图上面画得这样。在这种情况下，产品X部门的境外采购会使利润增加。此外，需要注意的是境外采购与进口竞争部门的影响，以减少最终产品的贸易，在图2中由更小的贸易角显示（没有画出）。因此，尽管贸易自由化在水平增加进口产品数量，贸易自由化在构成的等级上的体积减少进口数量。

按照惯例在赫克歇尔-俄林的范围内，充分就业和重新分配资源的摩擦是已经固定的。这是不难想象的，但是，搜索和再培训的费用可以减缓调整的速度，并增加其成本。然而，这是部门从事境外采购可能遇到的产出和就业的扩大。结果就是那些反对与低工资国家进行交易的担忧，就是海外采购将导致行业中就业机会消失的担忧，使变异数波动异常强烈。

虽然上述结果是由该模型的具体假设下实现的，所得出的结果与我们的设想基本一致。原本的设想是采用了境外采购，降低了成本，从而提高竞争力，出口的产品应该增加而不是减少。一个小国，它的最终产品的价格在是由世界市场的需求和供给条件所决定的，通过节约成本来提高在世界市场价格销售。一个大国就可以通过降低成本使价格更低从而扩大市场份额。

我们可以得出结论，部门注意到组件贸易自由化使贸易和工人收入之间的关系增加多了一层复杂的关系。如果贸易自由化包括了在进口竞争部门的境外采购，那么工人的相对工资就会随着上升或下降。如果贸易自由化使得出口行业更容易境外采购，那么后果将是最终成品进口增加对于工人的相对工资起到消极的作用。因此，对于非技能工人来说，产品X在出口行业企业采取境外采购以及出口行业技术发展是最坏的情况。

一些研究人员认为，生产非贸易品行业的存在可能会造成不平等收入的扩大。我们采用上述方法确定的条件下，会出现这种情况。我们看到图1所描述的离岸采购对非贸易世界的影响。我们这样做是通过扩展的曲线图，重新给产品Y和X贴上标签T（用于贸易）和N（非贸易）。这意味着X和Y两个行业，已经被集中到一个单一的可贸易部门，这就要求我们假设在这次设定的贸易条件是保持恒定的。在图中，非贸易品（N）现在是劳动密集型行业，而可贸易（T）是技术密集型行业。这种假设在研究文献中是一种普遍做法，也可能反映在现实实施得很好，特别是如果一个包括非贸易部门的范围

广泛的服务。

如果是从事境外采购，因此，从到新的单位价值等产量线转移T o到T11的贸易部门，然后在生产要素价格的调整将导致非熟练工人的工资下降相对熟练同行的。根据模型，产出和就业都在贸易部门和非贸易品部门的兴衰崛起的充分就业的假设。作为国内经济的进一步开放或“全球化”，其可怕的负面影响的非技术工人的相对位置，许多这方面的发展将被解释。然而，这样的结果带来了一个国家制造业的扩张和收缩，对非贸易和服务部门推测。这样的结果与观察到的发展显然是不一致的，按照制造业已稳步下降，发达经济体随处可见。然而，如果像流通，金融，保险，咨询等服务包括在贸易品，属于他们的地方，然后该部门将扩大的预测可能会少远牵强。

当在非贸易品部门中进行境外采购的地方，那么结果是相反的，与非技术工人的相对工资上涨和输出，并在非贸易部门上涨以及就业。在这种情况下，服务业的扩展，而制造业的跌幅。

外文翻译原文

Summary:

The domestic repercussions of trade liberalization have come under intense scrutiny in recent years. Trade liberalization and other aspects of globalization have been blamed for income inequality in the United States and unemployment in Europe. A key concern has been trade with low-wage developing countries. Although economists have studied the issue, no clear-cut answers have emerged. This paper examines some reasons for this ambiguity. Endogeneity and simultaneity can create major problems, causing trade to be blamed for developments that should properly be attributed to other factors. But even taken on its own, trade has ambiguous effects. It is only in the simplest Heckscher-Ohlin set-up that trade liberalization has the unequivocal outcome predicted by its critics.

1 Introduction

As trade and economic openness have grown in recent years, so has the debate over their effects on the welfare of various interest groups. Of particular concern have been the potential consequences of globalization for the jobs and wages of less skilled workers. This debate has been intensified as the share of industrial-country trade with developing, low-wage countries has risen. In the United States, as well as Europe, fears are widespread that jobs, wages and living standards are at risk, especially among workers who compete directly with imports from low-wage countries.

Among economists, the debate has focused on the relative contributions of trade and technological change to the observed rise in income inequality in the United States and to high and sustained unemployment in Europe.Trade economists have tended to minimize the role of trade in these developments, while a number of labor economists have advanced the opposite argument. Although the debate is far from resolving the dispute, it has revealed the immense complexity of the issue at both theoretical and empirical levels.

Section 2 sets out the basic issues involved and traces the effects on wages and employment in the context of a two-good, three-factor model in which all goods are tradable. Section 3 considers the role of end products which are non-tradable, but some of whose parts and components may be tradable and thus subject to offshore sourcing. Since offshore

sourcing may involve offshore production and hence foreign direct investment, Section 4 examines the implications of capital flows. Section 5 examines the potential for unemployment. Section 6 provides some concluding observations.

2 Offshore Sourcing and Relative Wages

One of the cornerstones of traditional trade theory is the role of factor proportions in the determination of specialization and trade. Variations in factor endowments across countries and in factor intensities across products play a key role in the determination of comparative advantage. When these principles are applied at the level of products, it is easily shown that trade liberalization will reduce the relative returns of factors used intensively in the production of import-competing goods. In today’s advanced countries import-competing goods tend to be relatively intensive in unskilled and semi-skilled labor. If trade liberalization increases the flow onto domestic markets of imports from labor-rich, low-wage countries, then the Stolper-Samuelson logic predicts that jobs and relative wages will come under pressure in import-competing industries. The pressure will spread from there to the rest of the economy. Leamer (1998) is an excellent reference for the application of this approach to the problem.

The products entering into international trade are, however, very complex commodities, consisting of many parts and components. In the past, the dominant tendency has been for such products to be produced more or less in their entirety in a single country. Outsourcing of parts and components was, of course, widely used, but it tended to be more national than international in nature, mainly because the costs of coordination rose steeply when outsourcing was pushed across national borders. This tendency to keep production within national borders made it possible for products to be labeled as “Made in Austria” or “Made in the USA.”

In recent years, major innovations in transportation and communications technologies have sharply reduced the cost of cross-border coordination, with the consequence that offshore sourcing and production have been growing extremely rapidly. This development has been helped along not only by trade liberalization, but by greater openness of economies around the world to flows of direct investment and to the movement of persons, information

and technologies.

Consequently, many products are rapidly losing their national identities as multinationals and others resort increasingly to offshore sourcing and production of parts, components, and assembly. In making their decisions about where to source, produce or assemble, manufacturers pay close attention to coordination as well as production costs. It is not surprising to find that factor endowments and factor intensities play important roles in determining countries’ competitiveness in the production of parts and components and in the performance of assembly operations.

Factor intensity tends to vary across the constituent activities of a complex production process. The factor intensity of the end product, which has been the focus of traditional trade theory, is just the weighted average of the associated component factor intensities. Evaluating comparative advantage at the level of components is not very different from doing so for final products. From the factor-proportions point of view, a capital-rich, high-wage country, endowed with plenty of skilled workers, will tend to have comparative advantage in the more capital- and skill-intensive components of a product and comparative disadvantage in components requiring relatively heavy inputs of semi-skilled and unskilled labor.

This implies that such a country can improve its competitiveness in the market for the final product by outsourcing labor-intensive components to low-wage countries. The gist of this idea is displayed in Figure 1. There are two products, X and Y, and three factors, capital (K), skilled labor (H), whose return is represented by h and ordinary labor (L), whose return is w. Capital is for the moment assumed to be immobile and sector-specific, while the two types of labor are perfectly mobile between sectors. The two products are assumed to be fully tradable. In trade between advanced and developing countries, product X would be the high-wage country’s import good and product Y its export good.

Figure 1

Curves X o and Y o represent the unit-value isoquants for the two products, respectively. In the Stolper-Samuelson framework, a decline in the price of X, brought about by trade liberalization, shifts the X-isoquant out. The subsequent adjustment of factor prices to this change in relative goods prices generates a flatter w/h ratio, tangent to the new X-isoquant (not drawn) and the original Y-isoquant. This deterioration in unskilled labor’s position is at the heart of the contemporary debate.

If technological improvement takes place in the X-industry, it will shift the X-isoquant inward (not shown), making the factor-price ratio steeper and thereby improving the relative position of unskilled labor. Thus, if trade liberalization and technical change take place simultaneously in the import-competing industry, the relative position of unskilled labor may improve, deteriorate, or stay the same.

Technical progress in the Y-sector shifts the Y-isoquant inward (not shown), thus worsening the position of unskilled labor. Hence, trade liberalization which brings in imports together with technical progress in the country’s export sector would reinforce each other in worsening labor’s position. Here, an increase in openness and trade would be associated with a deterioration in labor’s income position, but it would be important for policy purposes to know the relative contributions of the two sources.

The problem becomes more complicated when we allow for trade in parts and components. To illustrate, suppose that each final product is made up of two components. Let product X consist of components x1 and x2, with the ray through point a representing the expansion path for x1 at factor-price ratio w/h, and ray ab giving the slope of the expansion path (not drawn) for component x2. The factor intensity along ray 0x, which represents the expansion path for the end product, X, is the weighted average of the factor intensities of the two components. Component x1 is clearly the relatively capital-intensive component.

When transportation and coordination costs are sufficiently high and trade barriers sufficiently restrictive, the country will produce both components at home. Integrated production of this type was the norm for many commodities in much of the post-war period. In recent years, however, reductions in tariff and non-tariff barriers, as well as innovations in transportation and telecommunications have sharply reduced the cost of offshore sourcing and offshore production. Hence, both export and import-competing industries are making increasing use of offshore sourcing and production of components, as well as offshore assembly. Aircraft makers like Boeing and Airbus, as well as the many industries with maquiladora operations, are examples of the phenomenon.

Suppose, in the context of Figure 1, that removal of the aforementioned barriers reduces the offshore cost of component x2to such an extent that its production at home becomes economically non-viable. The X-industry continues to make component x1at home and to assemble the product there, but it shifts procurement of component x2to foreign sources. Assume for simplicity that it pays for imports of x2 by exporting x1.

If this realignment of production reduces the resource cost of X, then the family of isoquants representing the new conditions will shift inward and rotate to the north-west. Suppose that the unit-value isoquant representing the new cost conditions is given by X11, so that the quantities of skilled and unskilled labor used at point a represent the amounts required to produce enough of x1 to make the original quantity of X, plus an additional amount of x1 to be exported in return for imports of x2, all evaluated at the initial factor-price ratio, w/h.

If the country is small, end-product prices are given on world markets and are unaffected by these changes, implying that factor-price ratio, w/h, is no longer an equilibrium ratio. The

equilibrium ratio must be tangent to the original Y-isoquant, Y0, and the new X-isoquant, X11. That factor price ratio, which is not drawn, will clearly be steeper than ratio, w/h, implying an improvement in the relative wages of unskilled workers.

Here, we have a further complication of the process. We saw above that liberalization of trade in final goods shifts the X-isoquants out if it reduces the price of X; that shift turns factor prices against unskilled labor. But if the trade liberalization extends to components, or if cost-reducing technical change promotes offshore sourcing, then the pressure on isoquants from this source will run in the opposite direction. Both the volume and the pattern of trade will change, while relative wages may rise, fall, or remain the same. Here, the simple Stolper-Samuelson prediction clearly breaks down.

2.1 Component Specialization in the Skill-Intensive Sector

If component specialization were to take place in the skill-intensive sector, Y, it would again be the relatively labor-intensive component in which the country would have comparative disadvantage. This would be component y2, whose expansion path is given by the slope of line segment cd. The analysis of the effects of offshore sourcing then proceeds in a manner analogous to the previous case, so that the new unit-value isoquant is given at Y11, again requiring an adjustment in the factor-price ratio. Unlike the previous case, however, the new equilibrium factor-price ratio, which must be tangent to isoquantsY11and X o, will be flatter than originally, thus implying that the relative wage of unskilled workers declines.

2.2 Employment and Output Effects

While the factor-price ratio may move in either direction, employment and output will rise in the sector engaged in offshore sourcing and fall in the other sector, under the assumption that the economy’s resources must be fully employed. The essential features of adjustment are given in Figure 2, where the initial equilibrium occurs at points Q o and C o on indifference curve I o. Pw is the world price ratio and Pd the domestic, tariff-inclusive relative price. Offshore sourcing has effects analogous to those associated with technical improvement, namely, to expand the production possibility curve along the axis of the industry in which it takes place. AS a result, production shifts to Q1 in both panels. In Figure 2a, in which offshore sourcing takes place in the country’s import-competing industry, X-output rises and Y-output

falls (at Q1). In Figure 2b, where offshore sourcing occurs in the country’s export-sector, Y-output rises and X-output falls.

National welfare clearly rises as a result of offshore sourcing by the Y-industry, but its effect is ambiguous if it takes place in the import-competing industry. The figure shows the case of a decline in national welfare as consumption moves from point C o to C1. But this is not the only possible outcome. At the given domestic price ratio, Pd, imagine that this tariff-inclusive price were the result of a smaller tariff than before applied to a steeper world price than before. That steeper world price line (not drawn) would pass through points Q o and Q1 in Figure 2a at an angle which would become steeper as the price line itself became steeper, until the world price line passing through point Q o would lie below point Q1, rather than above as in the figure. In that case, offshore sourcing by the X-sector would be welfare-improving. Note, moreover, that the effect of offshore sourcing in the import-competing sector is to reduce trade in final products, as shown by the smaller trade triangles (not drawn) in Figure 2. Thus, while trade liberalization at the level of the end-product increases the volume of imports, trade liberalization at the component level decreases the volume of imports.

Figure 2

As is customary in the Heckscher-Ohlin context, full employment and frictionless reallocation of resources is taken as given. It is easy to imagine, however, that search and retraining costs can slow the speed of adjustment and increase its cost. Nevertheless, it is the sector engaged in offshore sourcing that experiences an expansion in output and employment. This result is strongly at variance with the concerns often expressed by those who oppose trade with low-wage countries, namely, that offshore sourcing will cause jobs to disappear in the industry.

While the results above are driven by the specific assumptions of the model, the outcome is not inconsistent with intuition. Intuition suggests that output should rise rather than fall in the industry which resorts to offshore sourcing, because offshore sourcing cuts costs and thereby improves competitiveness. A small country, whose end-product prices are given by demand and supply conditions in world markets responds to the cost savings by increasing sales at world prices. A large country is enabled by the decline in costs to lower price and thereby expand market share.

We conclude this section by noting that liberalization of component trade adds an additional layer of complexity to the relationship between trade and workers’ incomes. If trade liberalization includes offshore sourcing in the import-competing sector, then workers’ relative wages may rise or fall. If trade liberalization makes it easier for export industries to engage in offshore sourcing, then the consequences will be to augment the negative effects of the rise in end product imports on workers relative wages. For unskilled workers, therefore, a worst-case scenario would consist of a mixture of liberalization of imports of X, offshore sourcing by firms in the export industry, and technical progress in the export industry.

3 Offshore Sourcing in the Presence of Non-Tradables

Some researchers have argued that the presence of industries producing non-tradables could have contributed to the widening of income inequality. We employ the foregoing approach to identify the conditions under which this would be the case. We return to Figure 1 to sketch the effect of offshore sourcing in a world with non-tradables. We do so by re-labeling the isoquant maps for Y and X as T (for tradables) and N (for non-tradables). This