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Multinationals and the Training of Workers in Developing Countries

  • Abdelhakim Hammoudi

    ()

    (ERMES/University of Paris II and LORIA/INRA)

  • Wadii Hatit

The authors analyze the “direct investment v. export” decision of a multinational firm in competition with a potential entrant in a host country. They consider a workers’ skills asymmetry between the host and the multinational home countries. The possibility to train the hired workers when investing is given to the multinational. The authors illustrate that an improvement in the workers’ skills in the host country does not increase systematically the multinational incentive to invest. Also, they demonstrate that under the multinational’s training assumption, the tariff-jumping investment can always be welfare improving even if it excludes the local firm from the market.

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Paper provided by Economic Research Forum in its series Working Papers with number 0427.

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Length: 18 pages
Date of creation: Jan 2008
Date of revision: Jan 2008
Publication status: Published by The Economic Research Forum (ERF)
Handle: RePEc:erg:wpaper:0427
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