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
Other versions of this item:
- Eckel, Carsten, 2003. "Fragmentation, efficiency-seeking FDI, and employment," Munich Reprints in Economics 20539, University of Munich, Department of Economics.
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- Yousafzai, Arshad Hayat, 2014. "Exploring the Causality and Co-integration Relationship between FDI, GDP and Employment: A Case of Czech Republic," MPRA Paper 54827, University Library of Munich, Germany.
- Barthel, Fabian & Busse, Matthias & Osei, Robert, 2008.
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- Ronald B. Davies, 2003.
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- Davies, Ronald B., 2005. "Fragmentation of headquarter services and FDI," The North American Journal of Economics and Finance, Elsevier, vol. 16(1), pages 61-79, March.
- Chiara Franco & Francesco Rentocchini & Giuseppe Vittucci Marzetti, 2008. "Why do firms invest abroad? An analysis of the motives underlying Foreign Direct Investments," Department of Economics Working Papers 0817, Department of Economics, University of Trento, Italia.
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