Globalization, Ownership Structures and Productivity Dispersion

Abstract

We investigate the heterogeneous effects of productivity dispersion on firms' organizational choices, depending upon sectoral characteristics. Using trade data on imports from non-related parties (outsourcing) and related parties (integration) in the South, we show that productivity dispersion would increase imports from the South with outsourcing in the low headquarter intensity sector, along with an increasing fraction of the intra-firm imports in the high headquarter intensity sector, which is consistent with the predictions from the theory. Considering the bounded nature of a share of the intra-firm imports, a quasi-maximum likelihood estimation was used.