SEMINARIO EXTERNO DE INVESTIGACIÓN

Institutions play an important role shaping the multinational firms’ sourcing decisions worldwide. I focus in situations in which firms face uncertainty about institutions abroad. In a two-country model, I characterise a dynamic model with informational spillovers, which allows firms to better assess their offshoring potential by observing other firms behaviours. The equilibrium path adopts a sequential offshoring dynamic, led by the most productive firms in the market. In the long run, the information spillovers drive to economy to the perfect information steady state, vanishing the negative welfare effects produced by the prior uncertainty. However, in a multi-country world, the model leads to a multiple equilibria situation. I show that, in some equilibria, selection patterns emerge in firms’ choices about the offshoring locations. In these cases, the informational spillovers become a driver of the sectoral specialisation of countries, and thence a source of their comparative advantages. I also show the long run welfare consequences of the multiple equilibria.