Outsourcing and German foreign trade with the Czech Republic

Recently there has been a great deal of skepticism and concern as to whether the EU's East European enlargement will mostly benefit the present and the future EU-members. Therefore, it is helpful to assess the effect EU enlargement will have on the outsourcing of employment in the Czech Republic, one of the most advanced candidates. The scope of the paper is the theoretical and empirical examination of the outsourcing effects on wages for a large country like Germany and a smaller country like the Czech Republic. Is the Stolper-Samuelson effect sufficient to estimate foreign-trade effects on wages, or are other transmission channels, Me intra-industry trade, significant:, Is there empirical evidence of a disintegration of production lines with consequential implications for the production and trade structure of the Czech Republic:, What are the determinants for outsourcing from Germany to the Czech Republic and what are the consequences for wages and productivity in the Czech Republic? The empirical analysis presented in the paper is based on national account statistics and Eurostat Comext data.