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The causal effect of institutional quality on outsourcing

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  • H.J. Roelfsema
  • Zhang Yi

Abstract

This paper empirically investigates the relationship between institutional quality and outsourcing to developing economies. In contrast to cross-sectional studies on institutions, this paper uses panel data for 76 countries over 25 years (1980-2004). Employing panel data helps to show the causal relationship by controlling for the fixed effects and dynamic factors. Using within and IV estimations, we find that there is a positive effect of institutional quality on outsourcing in the lower-middle income countries. The quality of institutions is not an important determinant of outsourcing to either low or high income countries.

Suggested Citation

  • H.J. Roelfsema & Zhang Yi, 2009. "The causal effect of institutional quality on outsourcing," Working Papers 09-03, Utrecht School of Economics.
    • Handle: RePEc:use:tkiwps:0903
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    2. Ronald B. Davies & Rodolphe Desbordes, 2018. "Export Processing Zones and the Composition of Greenfield FDI," Working Papers 201807, School of Economics, University College Dublin.
    3. Xiangjun Ma, 2017. "Do taxes influence the organizational boundaries of international firms? An incomplete-contracting model with empirical evidence," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 26(7), pages 801-828, October.
    4. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
    5. Sławomir Pastuszka, 2013. "Zagraniczne inwestycje bezpośrednie w regionie świętokrzyskim w latach 2005-2011," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 10, pages 93-115.

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    Keywords

    Institutional quality; Outsourcing; Developing countries;
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