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The employment effects of foreign direct investment

Author

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  • Konings, Jozef

    (European Investment Bank, Economic and Financial Studies)

Abstract

Recognising three main channels of economic integration (labour migration, trade flows, and FDI), this paper focuses on the employment effects of FDI in Europe, addressing, in particular, concerns that EU firms will relocate jobs to low-wage countries in Central and Eastern Europe at the expense of jobs elsewhere in the European Union. European firm level data are used to document firm level differences in labour costs and productivity between high-wage and low-wage regions, thereby assessing the competitiveness of various regions. In addition, firm level data of over 1,000 European transnational corporations and their affiliates are used to analyse whether employment relocation between high-and low-wage regions occurs. The main finding is that employment relocation from west to east is not taking place, but there is evidence for employment relocation within high-wage European regions.

Suggested Citation

  • Konings, Jozef, 2004. "The employment effects of foreign direct investment," EIB Papers 4/2004, European Investment Bank, Economics Department.
    • Handle: RePEc:ris:eibpap:2004_004
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    References listed on IDEAS

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    Cited by:

    1. Daniele, Vittorio, 2007. "Criminalità e investimenti esteri. Un’analisi per le province italiane [The effect of organized crime on Foreign Investments. An Empirical Analysis for the Italian Provinces]," MPRA Paper 6417, University Library of Munich, Germany.
    2. Marc-Andreas Muendler & Sascha O. Becker, 2010. "Margins of Multinational Labor Substitution," American Economic Review, American Economic Association, vol. 100(5), pages 1999-2030, December.
    3. Vittorio, Daniele & Ugo, Marani, 2008. "Organized Crime and Foreign Direct Investment: the Italian Case," MPRA Paper 7217, University Library of Munich, Germany.
    4. Horst Siebert, 2006. "Locational Competition: A Neglected Paradigm in the International Division of Labour," The World Economy, Wiley Blackwell, vol. 29(2), pages 137-159, February.
    5. Nicolae Marinescu, 2020. "The Impact Of Foreign Direct Investment On Employment In Host Countries: The Case Of Central And Eastern Europe," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 181-186, October.
    6. Enrico Marelli & Laura Resmini & Marcello Signorelli, 2014. "The Effects Of Inward Fdi On Regional Employment In Europe," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 8(1), pages 1-23, JUNE.
    7. VINTILA DENISIA & Popescu Raluca Georgiana, 2012. "The Effects Of Foreign Direct Investments On Employment In Central And Eastern Europe. Focus On Romania And Poland," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 81-87, July.
    8. Ingo Geishecker & Gabor Hunya, 2005. "Employment Effects of Foreign Direct Investment in Central and Eastern Europe," wiiw Research Reports 321, The Vienna Institute for International Economic Studies, wiiw.

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    More about this item

    Keywords

    EU enlargement; low wage competition; relocation; job creation;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • 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
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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