Is Human Capital Losing from Outsourcing? Evidence for Austria and Poland

Feenstra and Hanson (1997) have argued in the context of the North American Free Trade Agreement that US outsourcing to Mexico leads to an increase in the skill premium in both the US and Mexico. In this paper we show on the example of Austria and Poland that with the new international division of labor emerging in Europe Austria, the high income country, is specializing in the low skill intensive part of the value chain and Poland, the low income country, is specializing in the high skill part. As a result, skilled workers in Austria are losing from outsourcing, while gaining in Poland. In Austria, relative wages for human capital declined by 2 percent during 1995-2002 and increased by 41 percent during 1994-2002 in Poland. In both countries outsourcing contributes roughly 35 percent to these changes in the relative wages for skilled workers. Furthermore, we show that Austria’s R&D policy has contributed to an increase in the skill premium there.foreign direct investment ; wage inequality ; transition economy

Is Human Capital Losing from Outsourcing? Evidence for Austria and Poland

Feenstra and Hanson (1997) have argued in the context of the North American Free Trade Agreement that US outsourcing to Mexico leads to an increase in the skill premium in both the US and Mexico. In this paper we show on the example of Austria and Poland that with the new international division of labor emerging in Europe Austria, the high income country, is specializing in the low skill intensive part of the value chain and Poland, the low income country, is specializing in the high skill part. As a result, skilled workers in Austria are losing from outsourcing, while gaining in Poland. In Austria, relative wages for human capital declined by 2 percent during 1995-2002 and increased by 41 percent during 1994-2002 in Poland. In both countries outsourcing contributes roughly 35 percent to these changes in the relative wages for skilled workers. Furthermore, we show that Austria’s R&D policy has contributed to an increase in the skill premium there

Poland's Integration into the World Economy: Foreign Direct Investment and the Skill Premium

foreign investment; wage inequality; international trade and technology and labor market interactions; vertical and horizontal FDI's location determinants; transition economy

Ownership, Capital or Outsourcing: What Drives German Investment to Eastern Europe?

The paper takes a first look at the host and home country effects of German FDI in Eastern Europe (EE) based on new survey data of 1050 investment projects in EE by 420 German multinationals during the 1990s. We find that German investors transfer a substantial amount of financial capital to EE. Furthermore, the most dynamic and innovative segment of the German economy invests in the East which explains why single owned firms dominate as the form of control. We also find strong evidence of vertical FDI suggesting that German cororations are outsourcing a substantial share of their production to EE affiliates to exploit lower wages in the East

Ownership, Capital or Outsourcing: What Drives German Investment to Eastern Europe?

The paper takes a first look at the host and home country effects of German FDI in Eastern Europe (EE) based on new survey data of 1050 investment projects in EE by 420 German multinationals during the 1990s. We find that German investors transfer a substantial amount of financial capital to EE. Furthermore, the most dynamic and innovative segment of the German economy invests in the East which explains why single owned firms dominate as the form of control. We also find strong evidence of vertical FDI suggesting that German cororations are outsourcing a substantial share of their production to EE affiliates to exploit lower wages in the East.capital flows ; vertical vs. horizontal FDI ; corporate governance ; globalization ; Eastern Enlargement

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

'A Nation of Poets and Thinkers' - Less So with Eastern Enlargement? Austria and Germany

Many people in the European Union fear that Eastern Enlargement will lead to major job losses. More recently, these fears about job losses have extended to high skill labor and IT jobs. The paper examines with new 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, 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 the most skill intensive activities to Eastern Europe taking advantage of cheap abundant skilled labor in Eastern Europe. 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. Corporations' outsourcing of skill intensive firm activity to Eastern Europe has helped to ease the human capital crisis in both countries. We find that high skilled jobs transferred to Eastern Europe account for 10 percent of Germany's and 48 percent of Austria's supply of university graduates in the 1990s. We then discuss what can be done to address the skill exodus to Eastern Europe. We show that R&D subsidies do not work in economies with a skill crisis and we suggest to liberalize the movement of high skill labor with Eastern Enlargement

Funding for rural NGOs

Background: Non-governmental organizations (NGOs) form the third sector of the economy alongside the public and private sectors. They are not profit-oriented, but they must actively seek sources of financing for their activities. Research purpose: The purpose of the article is to identify the factors that are responsible for the efficiency of NGO financing based on an analysis of the sources of NGO financing in rural areas compared to urban areas. Methods: The theoretical part discusses the concept of the third sector, the legal basis for its functioning, the specifics of NGOs that operate in rural areas, and Public Benefit Organizations (PBOs). In the empirical part, the research hypotheses were verified, which assumed the dependence of the amount of revenues and financial results on the NGOs’ PBO status, their experience, quantity, and diversification of revenue sources. The empirical analysis is based on a survey. Conclusions: Hypotheses were proved regarding the dependence of the amount of NGO revenues on the diversification of sources of financing, having PBO status, and between the financial result and increasing interest in new revenue search opportunities. However, the hypothesis regarding the relationship between an organization’s experience (measured by the length of the business) and the amount of revenue was not proved.Przedmiot badań: Organizacje pozarządowe tworzą trzeci sektor gospodarki obok sektora publicznego i prywatnego. Nie są nastawione na zysk, jednak muszą czynnie poszukiwać źródeł finansowania swojej działalności. Cel badawczy: Celem artykułu jest identyfikacja czynników, które są odpowiedzialne za sprawność finansowania organizacji pozarządowych na podstawie analizy źródeł finansowania organizacji pozarządowych na wsi w porównaniu z miastem. Metoda badawcza: W części teoretycznej omówiono pojęcie trzeciego sektora, podstawy prawne jego funkcjonowania, specyfikę organizacji pozarządowych prowadzących działalność na wsi oraz organizacji pożytku publicznego. W części empirycznej poddano weryfikacji hipotezy badawcze, zakładające zależność wielkości przychodów oraz wyniku finansowego od posiadania przez NGOs statusu OPP, ich doświadczenia, liczby oraz dywersyfikacji źródeł przychodów. Podstawą analiz empirycznych jest badanie ankietowe. Wyniki: Udowodniono hipotezy zakładające zależność wysokości przychodów organizacji pozarządowych od dywersyfikacji źródeł finansowania, posiadania statusu OPP oraz między wynikiem finansowym a zwiększaniem zainteresowania nowymi możliwościami poszukiwania przychodów. Nie udało się natomiast udowodnić hipotezy zakładającej zależność pomiędzy doświadczeniem organizacji (mierzonej długością prowadzonej działalności) a wielkością przychodów