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DETERMINANTS OF OUTSOURCING PRODUCTION: A Dynamic Panel Data Approach for Manufacturing Industries

Carmen Diaz-Mora

No 05-07, Working Papers on International Economics and Finance from FEDEA

Abstract: The present paper investigates the determinants of outsourcing production using a panel of 93 Spanish manufacturing industries for the period 1993-2002. Outsourcing is measured as production tasks which are contracting out to independent suppliers, a more direct and suitable indicator. After controlling for unobserved heterogeneity and simultaneity, our results show a high persistence of the outsourcing intensity. Moreover, outsourcing of production is positively related to unit labour costs, skills requirements and national ownership.

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