Manufacturing Reshoring and Global Value Chains: a Cross-Regional Analysis
- Diletta Pegoraro, Department of Economics and Management, University of Trento
In the last decade, many events occurred that shaped the modus operandi of western firms (e.g. Global Financial Crisis, rise of populism and nationalist governments, a restructuration of the Global Value Chains towards a more macro regional perspective, and a more fragile China-USA diplomacy). As a consequence of these events and the increasing importance of technology for collecting and analysing data, firms are often questioning the location decisions of their daily operations. One option for firms’ location decisions is to reorient their investments into their home country by adopting a manufacturing reshoring strategy. Manufacturing reshoring strategy is an intrinsic choice of location decision whereby concepts of Economic Geography (EG) and International Business (IB) disciplines come into play. Following on from this important shortcoming of the academic literature, this paper investigates the manufacturing reshoring strategies by adopting the framework of the Global Value Chains (GVCs) as a bridge between EG and IB. To narrow down the boundaries of the unit of analysis, the region as administrative territory is considered (i.e. Veneto in Italy, Midlands in United Kingdom and California in United States). To understand the rationale behind these modalities, a discrete choice model and a qualitative analysis are performed to identify which group of factors are more important at the regional level. Results suggest that factors related to efficiency seeking are statistically significant for adopting a full manufacturing reshoring strategy (i.e. in-house and insourcing). This reveals the indirect importance of a wealthy local supplier system and a supportive local ecosystem composed by universities, research centres and place-based policies.
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