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Journal of Economic Integration 2019 June;34(2) :280-307.
DOI: https://doi.org/10.11130/jei.2019.34.2.280
Assessing the Performance of Offshore Firms in Tunisia
Leila Baghdadi1
Sonia Ben Kheder and 2
Hassen Arouri 3
1Tunis Business School
2Tunis Higher School of Economics and Trade (ESSECT)
3National Centre for Statistics and Information, Sultanate of Oman
Corresponding Author: Leila Baghdadi ,Tel: 0021679409409, Email: Leila.baghdadi@tbs.rnu.tn
Copyright ©2019 Journal of Economic Integration
ABSTRACT
This paper examines the performance of offshore firms in Tunisia for the period 2002~2014. Using firm-level data, we analyze the impact of offshoring on turnover, productivity, wages and firm survival. Overall, offshore firms perform better with respect to all of these indicators. However, in the specific case of offshore firms that export and import at the same time, called two-way offshoring, performance is weaker across the board compared to their onshore counterparts. Lower productivity of offshore firms engaged in both exporting and importing suggests that these firms are low performers and that they self-select the offshore regime to reduce their fixed costs associated with exporting. The survival analysis highlights an increased probability that these types of firms will exit the market once tariffs and tax exemption privileges end, usually after 10 years. Thus, incentives provided in the Tunisian Investment Code are primarily attracting firms in the lower rungs of global value chains.

JEL Classification
F14: Empirical Studies of Trade
F23: Multinational Firms; International Business
L52: Industrial Policy; Sectoral Planning Methods
Keywords: Exports | Fiscal incentives | Productivity | Multinational firms | Tunisia
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