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South-North Integration, Outsourcing and Skills

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Author Info
Michael Landesmann () (The Vienna Institute for International Economic Studies, wiiw)
Robert Stehrer () (The Vienna Institute for International Economic Studies, wiiw)

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Abstract

This paper focuses on the increasing role played by lower- and medium-income countries in the global economy. In particular we look at the role of outsourcing in the process of trade integration of these countries. Further we discuss the impact of these integration patterns upon labour markets with a focus on the position of different skill groups of workers. The paper provides descriptive evidence on the changes in trade patterns over the past decades, distinguishing between product types (primary, processed, parts and final goods) and the sectoral structure (i.e. industry groups according to skill intensity). The paper reveals that there is an upward pressure in the skill content of exports to the EU in particular from low- and medium-income economies. The observed changes in skill content and in the shares of imports by these economies particularly for processed inputs and parts production are interpreted in a catching-up framework combined with outsourcing: High-income countries lose market shares mainly in processed inputs and parts but less so in final goods. With respect to country groups, especially the new EU member states account for a higher share of imports in EU Northern economies together with the fact that these countries shifted their export structure towards parts. EU Southern countries are more strongly present in processed inputs whereas the Rest of the World countries tend to shift exports towards final goods imports. This confirms the hypothesis that geographic proximity is important for outsourcing activities.

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Publisher Info
Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series Research Reports with number 353.

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Length: 34 pages including 11 Tables and 6 Figures
Date of creation: Feb 2009
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Publication status: Published as wiiw Research Report
Handle: RePEc:wii:rpaper:rr:353

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Related research
Keywords: international integration; outsourcing; labor market;

Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F15 - International Economics - - Trade - - - Economic Integration
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:
  1. Antràs, Pol & Helpman, Elhanan, 2004. "Global Sourcing," CEPR Discussion Papers 4170, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. David Hummels & Dana Rapoport & Kei-Mu Yi, 1998. "Vertical specialization and the changing nature of world trade," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 79-99. [Downloadable!]
  3. Robert C. Feenstra, . "Integration Of Trade And Disintegration Of Production In The Global Economy," Department of Economics 98-06, California Davis - Department of Economics. [Downloadable!]
    Other versions:
  4. Michael Landesmann & Robert Stehrer, 2005. "Income distribution, technical change and the dynamics of international economic integration," Economics working papers 2005-13, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
    Other versions:
  5. Robert C. Feenstra & Gordon H. Hanson, 1996. "Globalization, Outsourcing, and Wage Inequality," NBER Working Papers 5424, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Landesmann, Michael A. & Stehrer, Robert, 2001. "Convergence patterns and switchovers in comparative advantage," Structural Change and Economic Dynamics, Elsevier, vol. 12(4), pages 399-423, December. [Downloadable!] (restricted)
  8. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "Trading Tasks: A Simple Theory of Offshoring," NBER Working Papers 12721, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Geishecker, Ingo & Görg, Holger, 2004. "Winners and Losers: Fragmentation, Trade and Wages Revisited," IZA Discussion Papers 982, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Jose Campa & Linda S. Goldberg, 1997. "The Evolving External Orientation of Manufacturing Industries: Evidence from Four Countries," NBER Working Papers 5919, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Gene M. Grossman & Elhanan Helpman, 2002. "Integration Versus Outsourcing In Industry Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 85-120, February. [Downloadable!] (restricted)
  12. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June. [Downloadable!] (restricted)
    Other versions:
  13. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May. [Downloadable!] (restricted)
    Other versions:
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