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Determinants of Employment Growth at MNEs: Evidence from Egypt, India, South Africa and Vietnam

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  • Sumon Kumar Bhaumik

    (Brunel Business School, Brunel University, Social Sciences Building, Uxbridge, Middlesex UB10 9NW, UK.)

  • Saul Estrin

    (London Business School, UK)

  • Klaus E Meyer

    (University of Reading, UK)

Abstract

Many foreign investment operations into emerging markets are small, and are likely to have only a limited impact on the local economy. However, host governments often expect transfer of advanced technology from multinational enterprises (MNEs) operating in these markets to local firms by way of inter-firm mobility of skilled labourers. The extent of such transfers would be limited, among other factors, by the size of the pool of skilled labourers that can potentially be mobile between MNEs and local firms. This, in turn, is determined by employment growth at the MNEs. We develop an empirical specification that models this employment growth, by drawing on both the economics and international business literature. This model is then estimated using firm-level data from four emerging markets. We find that wholly owned foreign direct investment operations have higher employment growth, while local industry and institutional characteristics moderate the growth effect. This suggests that policies encouraging foreign investors to set up in form of joint ventures may not actually raise the benefits for the host economy. Comparative Economic Studies (2007) 49, 61–80. doi:10.1057/palgrave.ces.8100161

Suggested Citation

  • Sumon Kumar Bhaumik & Saul Estrin & Klaus E Meyer, 2007. "Determinants of Employment Growth at MNEs: Evidence from Egypt, India, South Africa and Vietnam," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(1), pages 61-80, March.
  • Handle: RePEc:pal:compes:v:49:y:2007:i:1:p:61-80
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    Cited by:

    1. Nassar, Heba., 2011. "Growth, employment policies and economic linkages : Egypt," ILO Working Papers 994652793402676, International Labour Organization.
    2. repec:ilo:ilowps:465279 is not listed on IDEAS
    3. Ibrahim Mike Okumu & Edward Bbaale & Madina Mwagale Guloba, 2019. "Innovation and employment growth: evidence from manufacturing firms in Africa," Journal of Innovation and Entrepreneurship, Springer, vol. 8(1), pages 1-27, December.
    4. Anh Nguyen Ngoc & Nhat Nguyen Duc & Chuc Nguyen Dinh, 2011. "The Impact of the Economic Stimulus on Domestic, Private Enterprises," Working Papers 06, Development and Policies Research Center (DEPOCEN), Vietnam.
    5. Thi Bich Thuy Dao & Van Quy Khuc & Manh Cuong Dong & Thuy Linh Cao, 2023. "How Does Foreign Direct Investment Drive Employment Growth in Vietnam’s Formal Economy?," Economies, MDPI, vol. 11(11), pages 1-15, October.
    6. Mickiewicz, Tomasz & Gerry, Christopher J. & Bishop, Kate, 2005. "Privatisation, corporate control and employment growth: Evidence from a panel of large Polish firms, 1996-2002," Economic Systems, Elsevier, vol. 29(1), pages 98-119, March.
    7. Villa, Stefania., 2010. "Exploring the linkages between investment and employment in Moldova : a time-series analysis," ILO Working Papers 994553423402676, International Labour Organization.
    8. Sergio Alessandrini, 2014. "Employment creation through inward FDI in the EMFTA and employment linkages within sectors," Chapters, in: Carlo Altomonte & Massimiliano Ferrara (ed.), The Economic and Political Aftermath of the Arab Spring, chapter 3, pages 79-105, Edward Elgar Publishing.
    9. repec:ilo:ilowps:455342 is not listed on IDEAS

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    More about this item

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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