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date: 20 October 2021

Abstract and Keywords

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

Keywords: services offshoring, the Netherlands, service industry, low-wage work, cost competition, local advantage, outsourcing

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