Marcel Smolka

Offshoring to Bulgaria

While visiting CESifo, Marcel Smolka will be working on the issue of offshoring. But in contrast to the literature, which focuses on countries at risk of losing production, he will look into what happens in a country where production relocates: Bulgaria. The country is a highly attractive offshore location for firms from Western Europe due to its low wages, geographical proximity and status as an EU member country. In his view, the focus on a country where production relocates is crucial to provide a comprehensive assessment of the costs and benefits of offshoring.

Mr Smolka tackles the following key questions: Which firms serve as offshoring targets in Bulgaria? What motivates these firms to supply their labour to foreign firms, and what are the implications of this for their own production activities? What are the effects on workers? A key challenge in tackling these questions is data availability: typical firm-level data sets lack information on whether firms produce on their own account, or whether they perform production activities on behalf of foreign firms.

Mr Smolka’s research opens up new perspectives on these questions by exploiting a novel data set on the universe of manufacturing firms in Bulgaria from 2008–2015. The key advantage of the data set is that it contains information about production activities offshored to Bulgaria as well as the payments received by Bulgarian firms for carrying out these activities, meaning that he can clearly differentiate between production on the firm’s own account as well as production on behalf of a foreign firm.

Marcel Smolka has been an Assistant Professor in Economics at the Department of Economics and Business Economics at Aarhus University, Denmark, since 2014. He is also a member of the Tuborg Research Centre for Globalisation and Firms. Mr Smolka obtained his PhD in Economics in 2014 from the University of Tübingen and was a visiting PhD at University College London (UCL) from September 2013 until March 2014. His research interests lie within international economics and include multinational enterprises, international trade and international migration.