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The Impact of Foreign Direct Investments on Labour Productivity: A Critical Examination of Results


  • Raluca Georgiana Popescu

    () (Ph.D. Candidate, The Academy of Economic Studies,Bucharest, Romania)


The paper presents several results concerning the impact of foreign direct investments on labour productivity in different countries. The focus is on the labour productivity differences that exist between the foreign and domestic companies and on the way these differences evolve in the host country. Results show that national companies generally increase their labour productivity due to the technological and managerial competences that they borrow from the foreign companies established in their country and also because: firstly they have to protect themselves from the new competition and secondly they must comply with the growing demand coming from the new investors. Due to their higher labour productivity, foreign firms offer higher wages to their employees. This also determines a growth in the salaries of national companies’ skilled workers going to wage inequalities and skill differences. However, the overall effect of a growing productivity is most oftenly translated into job creation.

Suggested Citation

  • Raluca Georgiana Popescu, 2011. "The Impact of Foreign Direct Investments on Labour Productivity: A Critical Examination of Results," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 14(39), pages 115-132, March.
  • Handle: RePEc:rej:journl:v:14:y:2011:i:39:p:115-132

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    References listed on IDEAS

    1. Roubini, Nouriel & Brad Setser, 2004. "Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 378.
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    More about this item


    F16; F21; F23; J24; O24.;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • 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
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy


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