IDEAS home Printed from
   My bibliography  Save this article

The effects of Belgian outward direct investment in European high-wage and low-wage countries on employment in Belgium


  • Ludo Cuyvers
  • Reth Soeng


Purpose - The paper aims at providing evidence on the impact on employment of outward foreign direct investment, particularly from developed countries into low-wage countries, which is a major concern in many developed countries. Design/methodology/approach - The effects of foreign production undertaken by Belgian foreign-oriented companies on employment in Belgium are investigated by performing econometric tests for complementarity or substitution between home and affiliate employment. The data are from the Amadeus database and consist of a sample of 254 Belgian parent companies with foreign affiliates in low-wage and other high-wage European countries during the 1999-2007 period. Findings - The results show that, given the size of parent production in the home country, Belgian multinational enterprises with foreign affiliates in higher-wage European countries tend to employ more labour at home the more they produce in the host country. This probably reflects the needs of foreign affiliates in higher-wage European countries for management and supervisory services from parent companies. Another explanation might be that Belgian outward FDI is largely vertical. In contrast, no evidence is found about employment reallocation between parents and affiliates operating in lower-wage European countries. Originality/value - The paper provides evidence on overall effects on employment in Belgium of its outward foreign direct investment for the period 1999-2007, i.e. using the most recent data available. In contrast to many other studies, statistical diagnostic tests were carried out to choose the appropriate model to best fit the data.

Suggested Citation

  • Ludo Cuyvers & Reth Soeng, 2011. "The effects of Belgian outward direct investment in European high-wage and low-wage countries on employment in Belgium," International Journal of Manpower, Emerald Group Publishing, vol. 32(3), pages 300-312, June.
  • Handle: RePEc:eme:ijmpps:v:32:y:2011:i:3:p:300-312

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Blomstrom, Magnus & Fors, Gunnar & Lipsey, Robert E, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Economic Journal, Royal Economic Society, vol. 107(445), pages 1787-1797, November.
    2. 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.
    3. Herzer, Dierk, 2008. "The long-run relationship between outward FDI and domestic output: Evidence from panel data," Economics Letters, Elsevier, vol. 100(1), pages 146-149, July.
    4. Georges Siotis, 1999. "Foreign Direct Investment Strategies and Firms' Capabilities," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(2), pages 251-270, June.
    5. 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.
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    7. Fosfuri, Andrea & Motta, Massimo, 1999. " Multinationals without Advantages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(4), pages 617-630, December.
    8. Christopher F Baum, 2006. "An Introduction to Modern Econometrics using Stata," Stata Press books, StataCorp LP, number imeus, December.
    9. repec:hhs:iuiwop:490 is not listed on IDEAS
    10. Robert E. Lipsey & James R. Hines Jr. & R. Glenn Hubbard, 1995. "Home-Country Effects of Outward Direct Investment," NBER Chapters,in: Taxing Multinational Corporations, pages 7-12 National Bureau of Economic Research, Inc.
    11. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages 134-161, February.
    12. M. Ruth & K. Donaghy & P. Kirshen, 2006. "Introduction," Chapters,in: Regional Climate Change and Variability, chapter 1 Edward Elgar Publishing.
    13. repec:ilo:ilowps:185164 is not listed on IDEAS
    14. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2005. "Foreign Direct Investment and the Domestic Capital Stock," American Economic Review, American Economic Association, vol. 95(2), pages 33-38, May.
    15. ., 2004. "W," Chapters,in: An Eponymous Dictionary of Economics, chapter 21 Edward Elgar Publishing.
    16. Bulcke, D. van den. & Halsberghe, E., 1979. "Employment effects of multinational enterprises: a Belgian case study," ILO Working Papers 991851643402676, International Labour Organization.
    17. Keith Head & John Ries, 2004. "Exporting and FDI as Alternative Strategies," Oxford Review of Economic Policy, Oxford University Press, vol. 20(3), pages 409-423, Autumn.
    18. Jaan Masso & Urmas Varblane & Priit Vahter, 2008. "The Effect of Outward Foreign Direct Investment on Home-Country Employment in a Low-Cost Transition Economy," Eastern European Economics, Taylor & Francis Journals, vol. 46(6), pages 25-59, November.
    Full references (including those not matched with items on IDEAS)


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:ijmpps:v:32:y:2011:i:3:p:300-312. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.