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South-North Integration, Outsourcing and Skills

  • Michael Landesmann


    (The Vienna Institute for International Economic Studies, wiiw)

  • Robert Stehrer


    (The Vienna Institute for International Economic Studies, wiiw)

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

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Length: 34 pages including 11 Tables and 6 Figures
Date of creation: Feb 2009
Date of revision:
Publication status: Published as wiiw Research Report
Handle: RePEc:wii:rpaper:rr:353
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  1. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "Trading Tasks: A Simple Theory of Offshoring," NBER Working Papers 12721, National Bureau of Economic Research, Inc.
  2. Michael Landesmann & Robert Stehrer, 2004. "Income Distribution, Technical Change and the Dynamics of International Economic Integration," wiiw Working Papers 31, The Vienna Institute for International Economic Studies, wiiw.
  3. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1997. "Computing Inequality: Have Computers Changed the Labor Market?," NBER Working Papers 5956, National Bureau of Economic Research, Inc.
  4. Peter Egger & Robert Stehrer, 2003. "International Outsourcing and the Skill--Specific Wage Bill in Eastern Europe," The World Economy, Wiley Blackwell, vol. 26(1), pages 61-72, January.
  5. Robert Feenstra, 2003. "Integration Of Trade And Disintegration Of Production In The Global Economy," Working Papers 986, University of California, Davis, Department of Economics.
  6. Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1215-1244, November.
  7. Jörn Kleinert, 2000. "Growing Trade in Intermediate Goods: Outsourcing, Global Sourcing or Increasing Importance of MNE Networks?," Kiel Working Papers 1006, Kiel Institute for the World Economy.
  8. Antras, Pol & Helpman, Elhanan, 2004. "Global Sourcing," Scholarly Articles 3196327, Harvard University Department of Economics.
  9. Anderton, Bob & Brenton, Paul, 1999. "Outsourcing and Low-Skilled Workers in the UK," Bulletin of Economic Research, Wiley Blackwell, vol. 51(4), pages 267-85, October.
  10. Michael A. Landesmann & Robert Stehrer, 2002. "Evolving Competitiveness of CEEC’s in an Enlarged Europe," Rivista di Politica Economica, SIPI Spa, vol. 92(1), pages 23-88, January-F.
  11. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-45, May.
  12. 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.
  13. Irwin, Douglas A, 1996. "The United States in a New Global Economy? A Century's Perspective," American Economic Review, American Economic Association, vol. 86(2), pages 41-46, May.
  14. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact Of Outsourcing And High-Technology Capital On Wages: Estimates For The United States, 1979-1990," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 907-940, August.
  15. 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.
  16. Ingo Geishecker & Holger Görg, 2003. "Winners and Losers: Fragmentation, Trade and Wages Revisited," Discussion Papers of DIW Berlin 385, DIW Berlin, German Institute for Economic Research.
  17. 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.
  18. 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.
  19. 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.
  20. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
  21. 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.
  22. Landesmann Michael A. & Stehrer Robert, 2006. "Modelling International Economic Integration: Patterns of Catching-up and Foreign Direct Investment," Economia politica, Società editrice il Mulino, issue 3, pages 335-362.
  23. Paul, Catherine J Morrison & Siegel, Donald S, 2001. " The Impacts of Technology, Trade and Outsourcing on Employment and Labor Composition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(2), pages 241-64, June.
  24. repec:hrv:faseco:4784029 is not listed on IDEAS
  25. 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.
  26. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
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