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Backshoring of Production Activities in European Manufacturing

Dachs, Bernhard and Zanker, Christoph (2015): Backshoring of Production Activities in European Manufacturing.

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This note presents empirical evidence on production backshoring – the movement of production activities from locations abroad back to the home country. Between 2010 and Mid-2012, only four percent of all firms moved production activities back to their home country. For every backshoring firm, there are more than three offshoring firms. Thus, from today’s perspective it is unlikely that backshoring will be an important driver of a ‘manufacturing renaissance’ in Europe.

The most frequent reason for backshoring is poor quality of the goods produced at foreign locations, followed by the loss of flexibility and too high transport costs. Sectors with a high backshoring propensity are electrical equipment, communications equipment and the automotive industry. These sectors are the most obvious candidates for policy intervention to increase the frequency of backshoring in European manufacturing.

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