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Does foreign direct investment contribute to unemployment in home countries? An empirical survey

  • Agarwal, Jamuna Prasad
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    According to investors' motivations, outward foreign direct investment (FDI) can be distinguished between natural resources seeking, market seeking or efficiency seeking. In the first two types, unemployment resulting from export substitution and reimports is expected to be considerably less than employment emanating from additional exports of capital equipment, intermediate goods and new product lines to foreign affiliates, and the need for more office jobs in the home countries. The efficiency seeking FDI may cause more unemployment due to export substitution and reimports than employment through additional exports to host countries. Since the first tivo types constitute generally the bulk of FDI. net employment effect on home countries should ceteris paribus be positive.

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    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 765.

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    Date of creation: 1996
    Date of revision:
    Handle: RePEc:kie:kieliw:765
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    1. Gordon H. Hanson, 1995. "The Effects of Offshore Assembly on Industry Location: Evidence from U.S. Border Cities," NBER Working Papers 5400, National Bureau of Economic Research, Inc.
    2. Vernon, Raymond, 1979. "The Product Cycle Hypothesis in a New International Environment," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(4), pages 255-67, November.
    3. Robert E. Lipsey, 1994. "Outward Direct Investment and the U.S. Economy," NBER Working Papers 4691, National Bureau of Economic Research, Inc.
    4. Irving B. Kravis & Robert E. Lipsey, 1988. "The Effect of Multinational Firms' Operations on Their Domestic Employment," NBER Working Papers 2760, National Bureau of Economic Research, Inc.
    5. Langhammer, Rolf J., 1992. "The NAFTA: another futile trade area (AFTA) or a serious approach towards regionalism?," Kiel Discussion Papers 195, Kiel Institute for the World Economy (IfW).
    6. Beghin, John C. & Roland-Holst, David & Van der Mensbrugghe, Dominique, 1994. "Trade and Environment Nexus. Global Dimensions, The," Staff General Research Papers 1589, Iowa State University, Department of Economics.
    7. Jamuna Agarwal, 1980. "Determinants of foreign direct investment: A survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 116(4), pages 739-773, December.
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