On the Technology Spillovers of International Outsourcing of Services

This paper discusses the technology spillover effects of international services outsourcing by developing a model of endogenous technical progress represented by the increase of the varieties of intermediate inputs. Through the competitive equilibrium analysis, we conclude that the technology spillover of services offshoring can positively promote the growth rate of the undertaking country's productivity and technology, but the spillover effects are determined by the undertaking country's trade openness, the stock of human capital and technology gap relative to the outsourcing country.