Production Outsourcing in the International Market

Abstract

The article is organized in four parts. First part is in-troduction. In this part the aim of this work, the research problem and objectives are formulated. The aim of this work is as follows: to use the methods of simulation, to examine the outsourcing, to show theoretical and practi-cal aspects of the selected thesis, which have not only methodological, but the applicable value as well. The objectives of this work are: 1) to examine and to intro-duce the impact of the costs of transportation to out-sourcing in the international trade, as well as to study the question of applicability and practice nationally and in-ternationally; 2) to review and to introduce to the calcu-lation of the impact of transportation costs of intermedi-ate goods and the practical use as well; In the second part of this article relationship of out-sourcing and international trade in contemporary econ-omy is analyzed and research hypotheses are formulated. In the third part of this article production outsourc-ing in the autarky is analyzed. In the fourth part of this article outsourcing in the in-ternational market like the results of study are analyzed. The problem solved in this paper is as follows: the exis-tence of international outsourcing depends on 3 factors: (a) fragmentation and benefits of outsourcing; (b) trans-portation costs; (c) distance between the input producer and final product producer. As bigger is the advantage of costs and lower are the costs of transportation the out-sourcing becomes more attractive in the case of free trade equilibrium. After the execution of the analysis of costs of delivery of input from input producer to the final product pro-ducer, it is essential to consider, where the production of final product is developed. This information becomes very important making the decisions of investments.