The Research on the Influence of Foreign Exchange Rate on the Outsourcing: Chinese Case Empirical Study

The driving factors of outsourcing is always regarded as exogenous variable, but followed by the obvious trends and increased fluctuations of foreign exchange rate, the influence of foreign exchange rate on the outsourcing is changing into an endogenous variable. This paper which based on the labor product rate of Two-country model of Antra`s(2004) and Two-country model of Ping Lo (2007) constructs Two-country model of the influence of foreign exchange rate on the outsourcing. This model has researched the influence of the trend and the cycle of exchange rate and the per wage rate to the outsourcing which is also proved by a derivative process. These propositions have testified by the China case time series data from 1994 to 2009 which conclude that influence of the trend and the cycle of exchange rate, the per wage rate and the per GDP to the outsourcing is remarkable. And so the foreign exchange rate could be not excluded from the analysis framework which should be included to the driving or decided factors of outsourcing.