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The causal effect of institutional quality on outsourcing

  • H.J. Roelfsema
  • Yi Zhang

This paper empirically investigates the relationship between institutional quality and outsourcing to developing economies. In contrast to cross-sectional studies on institutions, this paper uses panel data for 76 countries over 25 years (1980-2004). Employing panel data helps to show the causal relationship by controlling for the fixed effects and dynamic factors. Using within and IV estimations, we find that there is a positive effect of institutional quality on outsourcing in the lower-middle income countries. The quality of institutions is not an important determinant of outsourcing to either low or high income countries.

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File URL: http://dspace.library.uu.nl/bitstream/handle/1874/36713/09-03.pdf
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Paper provided by Utrecht School of Economics in its series Working Papers with number 09-03.

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Date of creation: 2009
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Handle: RePEc:use:tkiwps:0903
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  1. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
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