Large European arms companies increasingly own and control subsidiaries in other parts of the world. These subsidiaries operate hundreds of production sites used to manufacture and export weapons for the benefit of the parent company. Yet, they are bound by the legal framework in host countries. An important case study of this phenomenon is South Africa, which is now the site for numerous subsidiaries of large European arms manufacturers, including Rheinmetall and Hensoldt. Between 2018 and 2021, a Rheinmetall subsidiary in South Africa continued to export weapons to Saudi Arabia despite a German prohibition. This article uses South Africa as a case study to examine the potential consequences of the practice of offshoring in the context of weaknesses in South Africa’s arms export control framework and provides recommendations on how to improve scrutiny and reporting in South Africa’s system to better guard against this type of conduct.

This paper examines the role of offshoring in the flattening of the ratio of female to male hours worked in the US since the early 1990s. The observed flattening coincides with a decline in the share of occupations with high offshoring potential in women’s hours worked and an increase in service offshoring. I propose a two-gender, two-sector model with a continuum of occupations. Given the higher female intensity in the service sector, the gender hours ratio declines as service offshoring increases. Quantitatively, the service offshoring plays an important role in explaining the plateau in the gender hours ratio since the 1990s.

Offshoring and automation are sources of wage polarization. We reassess these two determinants of wage polarization in a single directed technical change setup that encompasses routine and nonroutine production. We empirically establish the conditional positive relationship between automation and relocations on one side and wage polarization on the other. Theoretically, we show that wage polarization increases with automation and offshoring. In particular, wage polarization in favor of domestic (nonroutine) high(low)-skilled workers is positively affected by an increase in domestic (nonroutine) high(low)-skilled labor quantity and/or absolute productivity. Additionally, it is also positively influenced by a rise in foreign (routine) medium-skilled labor quantity and/or absolute productivity while negatively impacted by an increase in domestic (routine) medium-skilled labor quantity and/or absolute productivity. We show that the effect of offshoring on wage polarization diminishes with the degree of substitutability between routine and nonroutine sectors in the economy, with the share of machines in the production of intermediate goods, and with the scale effect. We quantitatively assess the impact through a thorough data-based calibration exercise, where the numerical results confirmed the theoretical findings.

How does globalization affect politics? One of the most controversial aspects of globalization is offshoring, when manufacturing operations and business functions move abroad. Although voters generally dislike offshoring, it remains unclear how moving jobs abroad impacts democratic elections. Using a difference-in-differences estimation strategy, the author finds that incumbent government parties lose more votes in municipalities where a local plant moved production abroad between elections than in municipalities that did not experience such an event. The result holds across various time periods, different incumbent parties and diverse types of elections. In both national and regional elections, voters punish incumbent government parties when a local firm moves production abroad. Incumbent parties' vote shares fall as the number of jobs lost due to offshoring increases. In multiparty governments, voters disproportionately punish the largest coalition party for offshoring. The results of an original survey administered in Spain verify the importance of offshoring for voters' retrospective evaluations of incumbents.

American discontent with offshore production features heavily in trade policy debates. But Americans more typically encounter offshore production in apolitical contexts as consumers. We argue that these ostensibly apolitical encounters with offshore production are, in fact, freighted with political consequences. This paper asks: When and for whom does consumer-based exposure to offshore production reduce support for free trade? This is an important in its own right, but also sheds light on the contexts in which more overtly political references to offshore production are likely to find the most fertile ground. We answer these questions using a survey experiment that embeds an offshoring “prime” into an advertisement for pet furniture, varying the location of production across different treatment groups. We find that our experimental exposure to offshore production depressed enthusiasm for free trade, but only when production occurred in China, and mainly among white men living near trade-related job loss. That heterogeneity resonates with work on the economic and social aspects of the decline in American manufacturing employment.

The failure of Japanese electronics firms to participate fully in the Internet-fueled growth of the global electronics industry during the late 1990s triggered a period of questioning among top executives. This article examines Japanese managerial responses to the organizational model “value chain modularity,” which was deployed by the US electronics firms driving the creation of the Internet. While there were partial but significant steps taken in the direction of this new US model—increased specialization, outsourcing of low-end products, and shared factory investments in Japan—wholesale restructuring was resisted. This evidence is consistent with larger patterns of gradual institutional change in Japan. I argue that the result of this process will likely be increased, not diminished, institutional diversity over time. While globalization has accelerated the pace of change by opening new avenues for organizational experimentation and institutional layering, the drag on organizational change exerted by existing institutions slows the process enough to allow institutional and organizational innovations to develop into coherent systems with distinct characteristics. The result, inevitably, will be a uniquely Japanese approach to the challenges posed by globalization.

Received internationalization theory argues that firms occupy domestic space before going abroad; in other words, large, oligopolistic firms are most likely to internationalize. The experience of China, whose economy is fragmented and whose firms are small by global standards, suggests otherwise. We construct a model of small firm internationalization driven by the relative transaction costs of crossing domestic (in the case of China, provincial) and international borders. When the costs of crossing domestic borders exceed the costs of crossing international borders, firms will internationalize at a relatively early stage of development. In the case of China, local protectionism and inefficient domestic logistics increase the costs of doing business domestically; moreover, protection of property rights in the West and the advantages afforded Chinese owned firms reconstituted as foreign entities operating in China decrease the costs of ‘going out’. We coin the term ‘institutional arbitrage’ to capture Chinese firms' pursuit of efficient institutions outside of China. We argue that strategic exit from the home country rather than strategic entry into foreign markets may explain the internationalization of many Chinese firms.

This article addresses the offshoring of clinical trials to middle- and low-income countries, and the complicated ways in which they have become integral to public health and quality of care in these contexts. I focus on the operations of United States-based contract research organizations (CROs), which make up a specialized global industry focusing on the recruitment of human subjects and investigators; they are key players in an outsourced world of clinical development ‘service providers’. To get an on-the-ground understanding of the offshored clinical trial, I worked with regulators, health services administrators, and research clinicians in Eastern Europe and Latin America, two clinical trial market ‘growth regions’. By addressing the strategies of evidence-making that inform clinical trial offshoring, this article identifies the context-specific calculations by which experimental groups are being identified. It also addresses aspects of the clinical trial operational model, in which the failure to predict safety outcomes or a paradigm of expected failure is being exported along with the offshored trial. By highlighting the uncertainties of clinical research, this article points to gaps in systems of human protection as it considers new forms of accountability in private sector science and public health.