Hollowing Out or Filling In? The Effects of Multinational Enterprises on Domestic Plant Turnover and Job Growth in Factory Asia

In recent years, multinational enterprises (MNEs) originating from Asian countries, such as China and Korea, have rapidly expanded their global operations. However, the employment effects of these MNEs on their home countries have rarely been studied. By using Korean firm–plant matched data over the period of 2008–2013, we examine the effects of MNEs on domestic plant turnover and job growth. We find that Korean MNEs are more likely to close down their domestic manufacturing plants and open new plants than non-MNEs. Along with active plant turnover, Korean MNEs exhibit great active job reallocation across their domestic manufacturing plants within firms, without resulting in net job loss. In sum, Korean MNEs participating in Factory Asia have restructured their domestic manufacturing bases rather than hollowing them out.