Europe is reorganizing its international value chain. I document these changes in Europe's international organization of production with new survey data of Austrian and German firms investing in Eastern Europe. I show estimates of the share of intrafirm trade between Austria or Germany on the one hand and Eastern Europe on the other. Furthermore, I present empirical evidence of the drivers of the new division of labor in Europe. I find among other things that falling trade costs and reduced levels of corruption as well as improvements in the contracting environment in Eastern Europe are affecting the level of intrafirm imports from that region. These factors also favor outsourcing over offshoring. In contrast, low organizational costs of hierarchies and large costs of holdup (when there are no alternative investors in Old Europe or no alternative suppliers in Eastern Europe) favor offshoring over outsourcing. Tax holidays granted by host countries in Eastern Europe also mildly affect the organizational choice. (JEL: D23; D51; F11; L14; O11) (c) 2006 by the European Economic Association.
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Volume (Year): 4 (2006) Issue (Month): 2-3 (04-05) Pages: 612-622 Download reference. The following formats are available: HTML
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Antràs, Pol & Helpman, Elhanan, 2004.
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Other versions:
Pol Antràs & Elhanan Helpman, 2003.
"Global Sourcing,"
NBER Working Papers
10082, National Bureau of Economic Research, Inc.
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Dalia Marin & Thierry Verdier, 2004.
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1, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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"Is Human Capital Losing From Outsourcing? Evidence for Austria and Poland,"
Discussion Papers
76, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Andzelika Lorentowicz & Dalia Marin & Alexander Raubold, 2005.
"Is Human Capital Losing From Outsourcing? Evidence for Austria and Poland,"
Discussion Papers
76, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
[Downloadable!]
Dalia Marin & Verdier Thierry, 2007.
"Power in the Multinational Corporation in Industry Equilibrium,"
Discussion Papers
209, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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Christian Mugele & Monika Schnitzer, 2006.
"Organization of Multinational Activities and Ownership Structure,"
Discussion Papers
98, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
[Downloadable!]