The practice of sourcing service inputs from overseas suppliers has been growing in response to new technologies that have made it possible to trade in some business and computing services that were previously considered non-tradable.This paper estimates the e?ects of o?shoring on productivity in US manufacturing industries between 1992 and 2000.It finds that service o?shoring has a significant positive e?ect on productivity in the US, accounting for around 10 percent of labor productivity growth during this period.O?shoring material inputs also has a positive e?ect on productivity, but the magnitude is smaller accounting for approximately 5 percent of productivity growth.
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