International Outsourcing Ratio of China Industrial Sectors: How Measurement Matters

The paper uses three methods estimating material outsourcing ratio and service outsourcing ratio of China's 36 industrial sectors in 1997, 2002 and 2007. Then we investigate the quality of the three methods through the Shift-Share method. This study is useful for related empirical studies on outsourcing. We find that different methods lead to a big difference of outsourcing ratio. The results show an upward trend of China's industrial sector outsourcing ratio during 1997-2007, and the growth rate of service outsourcing is higher than material outsourcing; structural changes have a greater impact on the material outsourcing ratio than the services outsourcing ratio.