Outsourcing is defined here as the geographical split-up of a firm’s value chain over national boundaries. It incorporates the procurement of intermediate inputs from a foreign location via imports that either takes place within a firm (intra-firm) or outside the firm in the form of arm’s length transactions (inter-firm). Thus outsourcing may (optionally) be accompanied by vertical foreign direct investment. The intermediate inputs receive a value-added in the outsourced stage of the value chain. Subsequently, they require final assembly upon their return to the outsourcing entity. Therefore the phenomenon of outsourcing can be clearly separated from buying raw materials and trading final goods. The paper proceeds as follows: Section 2 relates the characteristics of outsourcing to trade theory. Different theoretical frameworks predicting the effects of outsourcing on factor-prices are presented along with their central assumptions. Additionally, they are put into perspective with regard to a conventional Heckscher-Ohlin framework. In section 3 the model-outcomes are confronted with reality by reviewing relevant empirical studies in the context of outsourcing to Eastern European countries. The findings of the previous sections are then - in section 4 - transformed into suggestions for the political agenda dealing with the labor market challenges resulting from a further EU integration. Section 5, finally, concludes on central insights of the paper and indicates directions for further research.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Theoretical framework for the prediction of outsourcing effects
- Outsourcing as international trade in intermediate inputs
- Effects of outsourcing in conventional trade theory: the Heckscher-Ohlin model
- Characteristics of outsourcing to Eastern Europe and model assumptions
- New trade models focusing on outsourcing
- Feenstra and Hanson (1997)
- Arndt (1997)
- Kohler (2001)
- Dilemma of theory in explaining outsourcing effects
- Effects of outsourcing in an empirical perspective.
- Elements of an empirical analysis of outsourcing
- Labor market trends in Western Europe since 1990
- Magnitude and structure of outsourcing
- Size and direction of outsourcing effects
- Empirical links between outsourcing and the labor market
- Policy Implications
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This study aims to analyze the impact of outsourcing to Middle and Eastern Europe, providing a theoretical framework and empirical insights into the effects of this phenomenon. It explores how outsourcing affects labor markets, economic growth, and overall competitiveness.
- Theoretical foundations of outsourcing
- Impact of outsourcing on labor markets in Western Europe
- Empirical evidence of outsourcing effects
- Policy implications for managing outsourcing
- Economic consequences of outsourcing
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: Introduces the topic of outsourcing to Middle and Eastern Europe and sets the context for the study. It highlights the importance of understanding the economic and social implications of this trend.
- Theoretical framework for the prediction of outsourcing effects: Examines the theoretical models that predict the impact of outsourcing, drawing from trade theory and international economics. It discusses the Heckscher-Ohlin model and newer models developed specifically for outsourcing, such as those by Feenstra and Hanson, Arndt, and Kohler.
- Effects of outsourcing in an empirical perspective: Analyzes the empirical evidence on the impact of outsourcing, considering data on labor markets, trade flows, and economic performance. It explores the magnitude and structure of outsourcing, and investigates the link between outsourcing and labor market outcomes.
- Policy Implications: Discusses the policy implications of outsourcing, considering measures to manage the potential risks and exploit the opportunities associated with this phenomenon. It explores strategies for mitigating job losses and enhancing competitiveness.
Schlüsselwörter (Keywords)
Key terms and topics addressed in the study include outsourcing, trade theory, Heckscher-Ohlin model, labor markets, Western Europe, Middle and Eastern Europe, economic growth, competitiveness, policy implications, empirical analysis, and international trade.
- Quote paper
- Oliver Dachsel (Author), Frederik Drescher (Author), Maren Jäger (Author), 2006, The Impact of Outsourcing to Middle and Eastern Europe, Munich, GRIN Verlag, https://www.grin.com/document/56951
