Holger Görg (Professor of International Economics, Kiel Institute for the World Economy), Aoife Hanley (Lecturer, University of Kiel) - This column examines the impact of offshore outsourcing on firms’ profits and innovation. Using data on 2,000 Irish firms, it shows that the purchase of foreign inputs raises both profits and innovation. Offshore outsourcing seems to improve competitiveness and bode well for an economy’s long-term economic health. Outsourcing is an emotive issue. It is an issue on which elections are fought. Consider US President Barack Obama’s fixation on outsourcing in the run up to the November election and the subsequent changes to the US tax system designed to retain US jobs. Business Week (2009) summarised American fears of outsourcing: “US voters have always responded to the fear that the best American jobs could flee overseas…Nobody ever lost a popularity contest by calling outsourcing or offshoring bad names”. Weiter zum Artikel (Authoren: Holger Görg, Aoife Hanley @ voxEU.org)
