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

Universality of Tip Singularity Formation in Freezing Water Drops

A drop of water deposited on a cold plate freezes into an ice drop with a pointy tip. While this phenomenon clearly finds its origin in the expansion of water upon freezing, a quantitative description of the tip singularity has remained elusive. Here we demonstrate how the geometry of the freezing front, determined by heat transfer considerations, is crucial for the tip formation. We perform systematic measurements of the angles of the conical tip, and reveal the dynamics of the solidification front in a Hele-Shaw geometry. It is found that the cone angle is independent of substrate temperature and wetting angle, suggesting a universal, self-similar mechanism that does not depend on the rate of solidification. We propose a model for the freezing front and derive resulting tip angles analytically, in good agreement with observations.Comment: Letter format, 5 pages, 3 figures. Note: authors AGM and ORE contributed equally to the pape