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OUTSOURCING AND FRAGMENTATION IN SINGAPORE'S MANUFACTURING INDUSTRY

SHANDRE M. THANGAVELU

Department of Economics, National University of Singapore, 1 Arts Link, Block AS2, Level 6, Singapore 117570, Singapore

Corresponding author.

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MUN HENG TOH

Department of Business Policy, National University of Singapore, Singapore

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, and

KWAN KEE NG

Asia Competitiveness Institute, Lee Kuan Yew School of Public Policy, National University of Singapore, Singapore

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https://doi.org/10.1142/S0217590808003099Cited by:3 (Source: Crossref)

Abstract

This paper studies the impact of outsourcing on productive performance of manufacturing industries in Singapore. The paper develops an outsourcing measure based on the narrow definition of intermediate imports given by Feenstra and Hanson (1996, 1999). Based on the input-output tables, the study uses 5-digit industrial-level classifications to measure the impact of outsourcing on productivity of the manufacturing industries in Singapore from 1995–2004. The outsourcing measure is further decomposed by import of services, import of IT services and import of business services. This decomposition allows us to study the impact of outsourcing of services in addition to the cross-border fragmentation of products and components. The results suggest strong positive impact of cross-border sourcing on the productivity of the manufacturing sector. The decomposition of outsourcing measure indicates that the manufacturing industries are more involved in cross-border sourcing of services, particularly in business services.

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