Globalization of production and innovation: how outsourcing is reshaping an advanced manufacturing area.

Abstract

This paper investigates the determinants and the spatial and functional dimensions of firms’ outsourcing. Based on a large survey of manufacturing firms in Lombardy, Italy, the analysis shows that outsourcing is remarkably wide across sectors and has a clear regional dimension, concerning highly skilled firms at most. Offshoring is still a minor fraction of the deverticalization process, largely related to wider strategies of internationalization by foreign group subsidiaries at intermediate stages of the value chain. The evidence suggests the regional system is inserting onto global knowledge networks, but also points at the risk of ‘branch plant effects’ in high-technology segments.