A New International Division of Labor in Europe: Offshoring and Outsourcing to Eastern Europe

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 intra-firm trade between Austria and 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 falling corruption levels as well as improvements in the contracting environment in Eastern Europe are affecting the level of intra-firm imports from Eastern Europe. They are also favoring outsourcing over offshoring. Low organizational costs of hierarchies and large costs of hold-up (when there are no alternative investors in Old Europe or no alternative suppliers in Eastern Europe) are favoring offshoring over outsourcing. Tax holidays granted by host countries in Eastern Europe also mildly affect the organizational choice

Analogical Reflection as a Source for the Science of Life: Kant and the Possibility of the Biological Sciences

In contrast to the previously widespread view that Kant's work was largely in dialogue with the physical sciences, recent scholarship has highlighted Kant's interest in and contributions to the life sciences. Scholars are now investigating the extent to which Kant appealed to and incorporated insights from the life sciences and considering the ways he may have contributed to a new conception of living beings. The scholarship remains, however, divided in its interest: historians of science are concerned with the content of Kant's claims, and the ways in which they may or may not have contributed to the emerging science of life, while historians of philosophy focus on the systematic justifications for Kant's claims, e.g., the methodological and theoretical underpinnings of Kant's statement that living beings are mechanically inexplicable. My aim in this paper is to bring together these two strands of scholarship into dialogue by showing how Kant's methodological concerns (specifically, his notion of reflective judgment) contributed to the ontological concern with life as a distinctive object of study. I argue that although Kant's explicit statement was that biology could not be a science, his implicit and more fundamental claim was that the study of living beings necessitates a distinctive mode of thought, a mode that is essentially analogical. I consider the implications of this view, and argue that it is by developing a new methodology for grasping organized beings that Kant makes his most important contribution to the new science of life

The Vanishing Barter Economy in Russia: A Test of the Virtual Economy Hypothesis? Reply to Barry Ickes

This paper is a reply to Barry Ickes' critique of my paper “Trust versus Illusion: What is Driving Demonetization in Russia?” in which I show that the data reject Barry Ickes' Virtual Economy explanation of barter in Russia in favor of an institutional explanation based on the lack of trust

Law in Transition and Development: The Case of Russia

The rise of barter and non-cash payments has become a dominant feature of the Russian transition to a market economy. This paper confronts with empirical evidence two approaches to explain barter in Russia: the ’illusion view’ and the ’trust view’ of barter. The ’illusion view’ suggests that barter allows the parties to pretend that the manufacturing sector in Russia is producing value added by enabling this sector to sell its output at a higher price than its market value. The ’trust view’ sees barter as an institution to deal with the absence of trust and liquidity in the Russian economy. We confront the prediction of both explanations with actual data on barter in Ukraine in 1997. The data reject the ’illusion view‘ in favor of the ‘trust view‘ of barter

The Theory of the Firm goes Global

What insights can be gained from bringing the theory of the firm to the global economy? I discuss several new features of the world economy that can be explained by incorporating the theory of the firm into the theory of international trade. Among the new features I discuss are the move to flatter corporate hierarchies and the decentralization of authority in firms, the “war for talent”, the rise of CEO pay in rich countries, organizational convergence across countries, and firm heterogeneity

An Inverse Look at the Center of M15

The observed radial and transverse velocities of individual stars in M15 are implemented as inputs to a fully non-parametric code (CHASSIS) in order to estimate the equilibrium stellar distribution function and the three-dimensional mass density profile. In particular, the paper explores the possibility of the existence of a central black hole in M15 via several runs that utilize the radial velocity data set which offers kinematic measurements closer to the centre of the cluster than the proper motion data. These runs are distinguished from each other in the choice of the initial seed for the cluster characteristics; however, the profiles identified by the algorithm at the end of each run concur with each other, within error bars, thus confirming the robustness of CHASSIS. The recovered density profiles are noted to exhibit unequivocal flattening, inner to about 0.0525pc. Also, the enclosed mass profile is very close to being a power-law function of radius inside 0.1pc and is not horizontal. Simplistically speaking, these trends negate the possibility of the central mass to be concentrated in a black hole, the lower bound on the radius of the sphere of influence of which would be $\gtrsim$0.041pc, had it existed. However, proper analysis suggests that the mass enclosed within the inner 0.01pc could be in the form of a black hole of mass $\sim{10^3}$M$_{\odot}$, under two different scenarios, which are discussed. The line-of-sight velocity dispersion is visually found to be very similar to the observed dispersion profile. The enclosed mass and velocity dispersion profiles calculated from runs done with the proper motion data are found to be consistent with the profiles obtained with the radial velocity data.Comment: Accepted for publication in AJ; 6 figure

The Opening Up of Eastern Europe at 20-Jobs, Skills, and ‘Reverse Maquiladoras’ in Austria and Germany

Many people in the European Union fear that Eastern Enlargement leads to major job losses. More recently, these fears about job losses have extended to high skill labor and IT jobs. The paper examines with unique firm level data whether these fears are justified for the two neighboring countries of Eastern Enlargement Austria and Germany. We find that Eastern Enlargement leads to surprising small job losses of less than 0.5 percent of total employment in Germany and of 1.5 percent in Austria, because jobs in Eastern Europe do not compete with jobs in Austria and Germany. Low cost jobs of affiliates in Eastern Europe help Austrian and German firms to stay competitive in an increasingly competitive environment. However, we also find that multinational firms in Austria and Germany are outsourcing skill intensive activities to Eastern Europe taking advantage of cheap abundant skilled labor there. We find that the firms’ outsourcing activities to Eastern Europe are a response to a human capital scarcity in Austria and Germany which has become particularly severe in the 1990s. We indeed find a reverse pattern of ‘Maquiladoras’ emerging with Eastern Enlargement in Austria and Germany compared to what economists have found for the North American Free Trade Agreement. Skilled workers in Austria and Germany are losing from outsourcing. In both countries outsourcing contributes 35 percent and 41 percent, respectively, to changes in relative wages for skilled workers in Austria and Germany. To address the skill exodus to Eastern Europe we suggest liberalizing the movement of high skill labor

Non trivial limit distributions for transient renewal chains

In this work we study the asymptotic of renewal sequences associated with certain transient renewal Markov chains and enquire about the existence of limit laws in this set up