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The impact of multinational corporations on a developing country: a trade off in the long run?

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  • Mariam Khawar

Abstract

This paper investigates the 'long-run' effects of multinational firms on unemployment and welfare of the host country. Our findings indicate that a trade off between unemployment reduction and national welfare exists for the host country which is contrary to the view that foreign investment via multinational firms is immiserizing in the 'short run'. This may also help explain the continuing efforts on the part of LDC governments to attract foreign investment. Furthermore, in the absence of a subsidy, increased investment by multinational firms does not have any adverse effect on the welfare of the host country, while still reducing unemployment.

Suggested Citation

  • Mariam Khawar, 1997. "The impact of multinational corporations on a developing country: a trade off in the long run?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 6(1), pages 101-112.
    • Handle: RePEc:taf:jitecd:v:6:y:1997:i:1:p:101-112
    DOI: 10.1080/09638199700000007
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    References listed on IDEAS

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    1. Brecher, Richard A. & Diaz Alejandro, Carlos F., 1977. "Tariffs, foreign capital and immiserizing growth," Journal of International Economics, Elsevier, vol. 7(4), pages 317-322, November.
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    Cited by:

    1. Joanna Scott-Kennel, 2007. "Foreign direct investment and local linkages: An empirical investigation," Management International Review, Springer, vol. 47(1), pages 51-77, February.

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