In a global supply chain, there is a rising concern and issue regarding hidden costs from various risks abiding in offshoring destinations. In order to protect and promote domestic production, governments provide investment attraction policies, develop Free Trade Zones, and engage in Free Trade Agreements or Regional Trade Agreements. There are many researches done regarding Supply Chain Risk Management, but there are only a few study on how the risk affects offshoring.
The study uses Data Envelopment Analysis Slack Based Measure Model to analyze offshoring efficiency, considering political, policy, social, and input-market risks, and logistics performance index. For Decision Making Units, 58 countries with available data for the variables are considered. There are a total of 5 input variables for the research, and for output variable, Value Added in Foreign Final Demand from OECD is used to proxy for offshoring. For this research, years 2010, 2012, 2014, 2016, 2018 are analyzed due to data availability, and the result is analyzed globally, for the years, and summarized by each continent.