Fragmentation, Efficiency-Seeking FDI, and Employment
AbstractThe paper examines the impact of efficiency-seeking FDI on factor prices, employment, and output. The analysis shows that when transportation costs fall, companies start relocating labor-intensive production processes to low-wage countries. But this does not necessarily hurt workers in the high-wage country. The paper demonstrates an employment-depressing "relocation effect" and an employment-enhancing "efficiency effect." Employment is more likely to rise if the internationality of production is high and if the supply of capital is elastic. Furthermore, the model is capable of explaining intra industry cross-hauling. Copyright Blackwell Publishing Ltd 2003..
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of International Economics.
Volume (Year): 11 (2003)
Issue (Month): 2 (05)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576
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- Ronald B. Davies, 2003. "Fragmentation of Headquarter Services and FDI," University of Oregon Economics Department Working Papers 2003-25, University of Oregon Economics Department, revised 01 Sep 2003.
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