THE ROLE OF OFFSHORING AND OUTSOURCING IN RESHAPING GLOBAL TRADE FLOWS

Abstract

This study examines how offshoring and outsourcing influence the structure and dynamics of global trade flows. As production processes increasingly fragment across countries, firms strategically relocate tasks to benefit from cost efficiencies, technological specialization, and global value chain (GVC) integration. Using theoretical insights and empirical evidence from OECD, UNCTAD, and World Bank reports, the paper demonstrates that offshoring and outsourcing significantly expand trade volumes by intensifying cross-border exchanges of intermediate and final goods. However, these practices also expose economies to risks associated with supply chain disruptions and dependency on foreign suppliers. The findings highlight the need for countries to diversify supply networks, strengthen technological capabilities, and develop policies that promote resilient participation in GVCs.