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Outsourcing, Foreign Ownership and Productivity: Evidence from UK Establishment Level Data

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  • Sourafel Girma
  • Holger Görg

Abstract

This paper presents an empirical analysis of "outsourcing" using establishment level data for UK manufacturing industries. We analyse an establishment's decision to outsource and the subsequent effects of outsourcing on the establishment's productivity. We compare outsourcing in domestic with foreign-owned establishments. Our empirical results suggest that high wages are positively related to outsourcing, suggesting that the cost saving motive is important. We also find that foreign-owned firms have higher levels of outsourcing than domestic establishments. In the productivity analysis we find that an establishment's outsourcing intensity is positively related to its labour productivity and total factor productivity growth and that this effect is more pronounced for foreign establishments.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.40686.de/dp361.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 361.

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Length: 25 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp361

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Keywords: outsourcing; foreign direct investment; productivity;

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References

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  16. Hijzen, Alexander & Görg, Holger & Hine, Robert C., 2003. "International Fragmentation and Relative Wages in the UK," IZA Discussion Papers 717, Institute for the Study of Labor (IZA).
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