Economical and Ethical Implications of Off-shoring Decisions from Germany to Romania

Economical and Ethical Implications of Off-shoring Decisions from Germany to Romania

Pavel, T.M.

Storm, S. (mentor)
Van de Poel, I. (mentor)
Van Beers, C. (mentor)

Technology, Policy and Management

Economics of Technology and Innovation

2015-08-31

With globalization, off-shoring has become a common practice for companies because of its cost saving advantages and ability to access needed human capital. However, off-shoring is often associated with the job loss and wage change in the domestic country. With the opening of the East European market, Germany has become one of the most important foreign investor in Romania. This paper derives a measurement for the German off-shoring in Romania using the World Input-Output Database and asks the question whether the changes in the off-shoring pattern can be associated with changes in the employment and wage levels in Romania and Germany. The results show that there is indeed a positive correlation between off-shoring and employment in both countries, whereas the correlation between off-shoring and the wage level is negative for Germany’s case and positive for Romania. The results of the econometrical analysis are then applied on the utilitarian and Rawlesian framework to assess whether the German off-shoring to Romania is an ethical process. Based on the ethical discussions, the German and Romanian governments as well as the German companies are given recommendations on how to act in the most ethical way in the context of the German off-shoring to Romania and its economic implications.

off-shore
employment
wage
utilitarianism
rawls

http://resolver.tudelft.nl/uuid:59bc3836-1d31-4401-ad2d-aef82f936c3d

Student theses

master thesis

(c) 2015 Pavel, T.M.