How important is employment protection legislation for Foreign Direct Investment flows in Central and Eastern European countries?
AbstractIn this article we investigate empirically the importance of labour market conditions and in particular the role of employment protection legislation as determinants of bilateral Foreign Direct Investment (FDI). We find that FDI flows are significantly higher in countries with relatively low unit labour costs. We also find that employment protection legislation does not exert a statistically significant impact on FDI flows. Our results are consistent with the interpretation that transition economies attract FDI via low production costs whereas indirect costs related to the rigidity of the labour market are less relevant. Copyright (c) 2009 The Authors. Journal compilation (c) 2009 The European Bank for Reconstruction and Development.
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Bibliographic InfoArticle provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.
Volume (Year): 17 (2009)
Issue (Month): 2 (04)
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Other versions of this item:
- Markus Leibrecht & Johann Scharler, 2007. "How Important is Employment Protection Legislation for Foreign Direct Investment Flows in Central and Eastern European Countries?," Economics working papers 2007-16, Department of Economics, Johannes Kepler University Linz, Austria.
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
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