Julia Kotlarsky, Natalia Levina, and Ekaterina Kuraksina
This chapter evaluates the extent of Russia’s attractiveness in the global IT offshoring market. In particular, it discusses the specifics of the IT offshoring market in Russia and assesses its strengths, weaknesses, opportunities, and threats. It concludes with a discussion of Russia’s major competitors in the global IT offshoring market and highlights key areas where Russia is likely to attract offshoring business in the future.
How Much Does Offshoring Matter?: Evolution of Imports and their Relation to Profits, Labor, and Firms’ Strategies in France, 1990–2009
Fabien Besson, Cédric Durand, and Sébastien Miroudot
This chapter assesses the evolution of offshoring and its socioeconomic impact in France over the period 1990–2009. It analyzes the relationship between offshoring and employment and explores the links between globalization and financialization and their consequences on labor. The chapter is organized as follows. Section 2 presents the state of the literature on offshoring in France. Section 3 describes the data and methodology. Section 4 assesses at the macro level the evolution of offshoring in France during the past two decades and offers preliminary findings of firms’ behavior in the context of the 2008–9 financial crisis. Section 5 proposes an econometric analysis of the relationship between offshoring, employment, and the share of labor in value-added. As aggregate results are often inconclusive, section 6 provides a more detailed outlook at the industry level. Section 7 summarizes the results and points out the policy implications of the analysis in the context of slow recovery and uncertainties on the economic prospects of high income economies such as France.
Désirée van Gorp and Desirée van Welsum
This chapter focuses on the implications of services offshoring for a small, open European economy, the Netherlands. Services trade is very active in Europe and much of this trade occurs among European countries. For the smaller countries in particular, offshoring provides access to a range of services and skills that are not available within the country. The Netherlands is one of the top three offshoring countries in the OECD. The chapter suggests that the image of offshoring as the transfer of low-wage work to developing countries is an inaccurate simplification and that in fact, the destination country may have relatively small wage differences and high education levels vis-à-vis the home country. It argues that cost competition cannot be the response to offshoring, as cost advantages are often short lived, even for developing countries. Instead, the focus should be on the creation of sustainable comparative local advantages
The chapter discusses the economic theory of international antitrust institutions. Economic theory shows that noncoordinated competition policies of regimes that are territorially smaller than the international markets on which business companies compete violate cross-border allocative efficiency and are deficient with respect to global welfare. At the same time, some diversity of antitrust institutions and policies promotes dynamic and evolutionary efficiency so that globally binding, worldwide homogenous competition rules do not represent a first-best solution either. After reviewing the existing international antitrust institutions and their prospects and limits from an economic perspective (with a focus on the International Competition Network, ICN), the chapter discusses reform proposals from economic literature.
Eiichi Tomiura, Banri Ito, and Ryuhei Wakasugi
This chapter reports the current status of offshoring by Japanese firms based on firm-level data and summarizes how offshoring firms differ from nonoffshoring firms in Japan to derive implications of offshoring for national economies. Section 2 begins with an overview of aggregate statistics related to Japanese offshoring. Section 3 explains the survey design and reports the current state of offshoring by Japanese manufacturing firms. Section 4 reviews how offshoring firms differ from nonoffshoring firms in terms of productivity, employment, and innovation, based on previous empirical studies of Japanese firm-level data. Section 5 adds concluding comments.
Since the late 1980s, Australian higher-education providers have been venturing abroad to establish teaching partnerships and branch campuses. Along with the United States and the United Kingdom, Australia is one of three large-scale providers of programs to students based in other countries, with around 150,000 students enrolled in Australian programs taught offshore in 2010. This chapter considers three modes of supply that involve the education provider delivering education in the student’s home country. “Cross-border supply” involves an educational institution in one country teaching a student who is resident in another country through distance or online education or through collaborative provision with a local partner institution. “Commercial presence” involves an educational institution based on one country establishing a branch campus in another country. “Presence of natural persons” involves staff of an educational institution (teachers, administrators, or marketing staff) traveling to provide educational services in another country.
This chapter examines the offshoring of Japanese small and medium enterprises (SMEs) using a unique data set that contains detailed information on offshoring. Section 1 begins by describing the data. Section 2 summarizes the offshoring characteristics of Japanese SMEs. Section 3 examines the determinants of offshoring, focusing on the choice between intrafirm and arm’s-length offshoring. Sections 4, 5, and 6 investigate the impact of offshoring on employment, skill upgrading, and productivity. Section 7 summarizes the results and concludes. Throughout the chapter, the results for Japanese SMEs are compared with the results for larger firms as evidenced in past studies.
Paulo Roberto Gião and Moacir de Miranda Oliveira Jr.
This chapter addresses the following questions: How do subsidiaries of multinational corporations (MNCs) operating in Brazil make use of offshore insourcing and outsourcing to get all the resources and competencies required, and how is a balance met between the two forms of sourcing? Within the interpretation of other concepts present in the study of international business, the chapter examines the process of internalization of activities conducted by subsidiaries of MNCs operating in Brazil and how the activities interact with the environment in Brazil. This interaction is evaluated according to strategic and nonstrategic activities undertaken in the country.
Frank Barry and Adele Bergin
This chapter discusses the unique situation of Ireland among other European countries: better known as a destination for offshoring rather than a typical developed-country source of offshoring. The chapter is organized as follows. Section 2 focuses on Ireland’s emergence and evolution as a manufacturing export platform and includes case studies of three of the most important foreign direct investment (FDI)-intensive manufacturing sectors of recent times: ICT, pharma-chem, and medical devices. Section 3 considers foreign-owned internationally traded services, which are of more recent provenance, and includes case studies of software and IT services and international financial services. Section 4 analyzes how Ireland’s inward FDI sectors have fared over the course of the current global recession. The chapter concludes with a discussion of the factors that account for Ireland’s success in attracting foreign direct investment.
Ralph E. Gomory and William J. Baumol
This chapter presents a conceptual discussion of the changing comparative advantage between an advanced and a rapidly developing economy. It highlights circumstances under which increased trade is not always beneficial to both parties. It outlines various cases where changing conditions in one of the countries may lead to asymmetric benefits from trade. One possibility is that enhanced productivity in a trading partner may be harmful to the home country. This arises in the analysis from a dominant/dominated trade relationship between two countries that is beneficial to the dominating and harmful to the dominated country. The dominant position may be reached either by circumstances or by strategy (e.g., pursuing a deliberate policy of subsidies, currency manipulation, etc.), while there are policy strategies regarding a diversified industrial base that can minimize the degree of domination that occurs. The chapter concludes that in order to maintain prosperity, countries like the United States must go beyond a focus on education and innovation and find means of keeping segments of manufacturing of innovative products within the United States. Rather than tariffs, it suggests an export/import certificate scheme similar to carbon permits that will help balance trade.