Foreign direct investment
This paper argues that the liberalisation of foregin direct investment (FDI) has made labour costs more important to domestic investment and long-run labour demand. It provides evidence from British and German data that is consistent with this view. First, high unit labour costs increase FDI outflows and lower FDI inflows. Second, the effect of unit labour costs on domestic manufacturing investment was more negative in the high-FDI 1980s than in the low-FDI 1970s, and this change was concentrated in high-FDI industries. The implied effect on long-run labour demand is substantial.
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- Klein, Michael W. & Rosengren, Eric, 1994.
"The real exchange rate and foreign direct investment in the United States : Relative wealth vs. relative wage effects,"
Journal of International Economics,
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- Lucas, Robert E. B., 1993. "On the determinants of direct foreign investment: Evidence from East and Southeast Asia," World Development, Elsevier, vol. 21(3), pages 391-406, March. Full references (including those not matched with items on IDEAS)