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Outward Investment, Employment, and Wages in Swedish Multinationals

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  • Blomstrom, Magnus
  • Kokko, Ari

Abstract

Examining detailed data for the home-country operations in Swedish multinationals during the period 1986-94, this paper shows that there are signs of very notable structural changes in the home-country operations of these corporations. It also shows that the effects vary according to economic conditions in the home country. In the 1980s, when the Swedish economy was characterized by high taxes, high inflation rates, and a tight labour market, relatively attractive jobs within the multinational corporations (MNCs) were relocated from Swedish plants to foreign affiliates. In the 1990s, by contrast, when the financial crisis had necessitated a host of micro- and macroeconomic reforms, the location decision of the MNCs were more favourable for the Swedish economy. New jobs created by the multinationals were found in activities with high productivity and wages. Thus, home-country effects of foreign direct investment seem, to a large extent, to be determined by the home countries' economic environment. Copyright 2000 by Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

Volume (Year): 16 (2000)
Issue (Month): 3 (Autumn)
Pages: 76-89

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Handle: RePEc:oup:oxford:v:16:y:2000:i:3:p:76-89

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References

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  1. Magnus Blomstrom & Linda S. Goldberg, 2001. "Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey," NBER Books, National Bureau of Economic Research, Inc, number blom01-1.
  2. Blomström, Magnus & Fors, Gunnar & Lipsey, Robert E., 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Working Paper Series 490, Research Institute of Industrial Economics.
  3. Blomström, Magnus & Kokko, Ari, 1994. "Home Country Effects of Foreign Direct Investment: Evidence from Sweden," Working Paper Series in Economics and Finance 3, Stockholm School of Economics.
  4. Magnus Blomstrom & Robert E. Lipsey & Ksenia Kulchycky, 1989. "U.S. and Swedish Direct Investment and Exports," NBER Working Papers 2390, National Bureau of Economic Research, Inc.
  5. Froot, Kenneth A. (ed.), 1994. "Foreign Direct Investment," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226266213, December.
  6. Gunnar Fors & Ari Kokko, 2001. "Home-Country Effects of FDI: Foreign Production and Structural Change in Home-Country Operations," NBER Chapters, in: Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, pages 137-162 National Bureau of Economic Research, Inc.
  7. Magnus Blomstrom & Robert E. Lipsey & Lennart Ohlsson, 1991. "What Do Rich Countries Trade with Each Other? R&D and the Composition of U.S. and Swedish Trade," NBER Working Papers 3140, National Bureau of Economic Research, Inc.
  8. Roger Svensson, 1996. "Effects of overseas production on home country exports: Evidence based on Swedish multinationals," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 132(2), pages 304-329, September.
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Citations

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Cited by:
  1. Frank Barry & Holger Gorg & Andrew Mcdowell, 2003. "Outward FDI and the Investment Development Path of a Late-industrializing Economy: Evidence from Ireland," Regional Studies, Taylor & Francis Journals, vol. 37(4), pages 341-349.
  2. Tain-Jy Chen & Ying-Hua Ku, 2003. "The Effects of Overseas Investment on Domestic Employment," NBER Working Papers 10156, National Bureau of Economic Research, Inc.
  3. Barry, Frank & Walsh, Frank, 2008. "Gains and losses from sectoral relocation: A review of theory and empirics," Structural Change and Economic Dynamics, Elsevier, vol. 19(1), pages 4-16, March.
  4. Ludo Cuyvers & Michel Dumont & Glenn Rayp & Katrien Stevens, 2005. "Home Employment Effects of EU Firms’ Activities in Central and Eastern European Countries," Open Economies Review, Springer, vol. 16(2), pages 153-174, April.
  5. L. Cuyvers & M. Dumont & G. Rayp & K. Stevens, 2002. "Home Employment Effects of EU Firms' Activities in Central and Eastern European Countries," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 02/158, Ghent University, Faculty of Economics and Business Administration.
  6. Frank Barry, 2002. "A Note on Transfer Pricing and the R&D Intensity of Irish Manufacturing," Working Papers 200230, School Of Economics, University College Dublin.
  7. Rosario Crinò, 2007. "Offshoring, Multinationals and Labor Market: A Review of the Empirical Literature," KITeS Working Papers 196, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jan 2007.

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