Incomplete Specialization And Offshoring Across Europe

Recent empirical studies have been searching for evidence on and driving forces for offshoring. We suggest an alternative specification rooted in incomplete specialization that views bilateral gravity equations as statistical relationships constrained on countries' multilateral specialization patterns. Our results support evidence for offshoring activities across Europe, driven by countries' multilateral specialization incentives, as expressed by supply-side country differences relative to the rest of the world.