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High-Tech Outsourcing: A Benefit-Cost Framework

Author

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  • Cameron Gordon
  • Alan Zimmerman

Abstract

Is international outsourcing “efficient†or merely a redistribution of resources from one economic sector to another? This paper looks at this question from the perspectives of: (1) economic theory, which abstracts away from institutions and towards generalized incentives; (2) management theory, which focuses more on institutional issues that economic theory tends to ignore; and (3) a combined perspective within a benefit-cost analysis framework. The paper argues that an evaluation of outsourcing's impacts requires determining how the practice affects overall size of economic output and equity across sectors and countries. A benefit-cost template is developed for considering these questions more systematically.

Suggested Citation

  • Cameron Gordon & Alan Zimmerman, 2007. "High-Tech Outsourcing: A Benefit-Cost Framework," The American Economist, Sage Publications, vol. 51(1), pages 97-105, March.
    • Handle: RePEc:sae:amerec:v:51:y:2007:i:1:p:97-105
    DOI: 10.1177/056943450705100109
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    References listed on IDEAS

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    1. McCarthy, Ian & Anagnostou, Angela, 2004. "The impact of outsourcing on the transaction costs and boundaries of manufacturing," International Journal of Production Economics, Elsevier, vol. 88(1), pages 61-71, March.
    2. Donald Siegel & Zvi Griliches, 1992. "Purchased Services, Outsourcing, Computers, and Productivity in Manufacturing," NBER Chapters, in: Output Measurement in the Service Sectors, pages 429-460, National Bureau of Economic Research, Inc.
    3. Slaughter, Matthew J., 2000. "Production transfer within multinational enterprises and American wages," Journal of International Economics, Elsevier, vol. 50(2), pages 449-472, April.
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    Cited by:

    1. Garvan Whelan & Paul Hanly & Vincent O’Connell & Oldřich Ludwig Dittrich & Naser Abu Ghazalah, 2021. "Impact on Firm Liquidity Arising from Outsourcing Decisions as Evidenced by Off-Balance-Sheet Disclosures," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 27(1), pages 17-27, February.

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