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Outward Investment, Employment, and Wages in Swedish Multinationals

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  • Blomstrom, Magnus
  • Kokko, Ari

Abstract

Examining detailed data for the home-country operations in Swedish multinationals during the period 1986-94, this paper shows that there are signs of very notable structural changes in the home-country operations of these corporations. It also shows that the effects vary according to economic conditions in the home country. In the 1980s, when the Swedish economy was characterized by high taxes, high inflation rates, and a tight labour market, relatively attractive jobs within the multinational corporations (MNCs) were relocated from Swedish plants to foreign affiliates. In the 1990s, by contrast, when the financial crisis had necessitated a host of micro- and macroeconomic reforms, the location decision of the MNCs were more favourable for the Swedish economy. New jobs created by the multinationals were found in activities with high productivity and wages. Thus, home-country effects of foreign direct investment seem, to a large extent, to be determined by the home countries' economic environment. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Blomstrom, Magnus & Kokko, Ari, 2000. "Outward Investment, Employment, and Wages in Swedish Multinationals," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 16(3), pages 76-89, Autumn.
    • Handle: RePEc:oup:oxford:v:16:y:2000:i:3:p:76-89
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    References listed on IDEAS

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    1. Blomstrom, Magnus & Fors, Gunnar & Lipsey, Robert E, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Economic Journal, Royal Economic Society, vol. 107(445), pages 1787-1797, November.
    2. Gunnar Fors & Ari Kokko, 2001. "Home-Country Effects of FDI: Foreign Production and Structural Change in Home-Country Operations," NBER Chapters, in: Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, pages 137-162, National Bureau of Economic Research, Inc.
    3. Blomström, Magnus & Kokko, Ari, 1994. "Home Country Effects of Foreign Direct Investment: Evidence from Sweden," CEPR Discussion Papers 931, C.E.P.R. Discussion Papers.
    4. Magnus Blomstrom & Robert E. Lipsey & Ksenia Kulchycky, 1988. "U.S. and Swedish Direct Investment and Exports," NBER Chapters, in: Trade Policy Issues and Empirical Analysis, pages 257-302, National Bureau of Economic Research, Inc.
    5. repec:hhs:iuiwop:490 is not listed on IDEAS
    6. Roger Svensson, 1996. "Effects of overseas production on home country exports: Evidence based on Swedish multinationals," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(2), pages 304-329, September.
    7. Robert E. Baldwin, 1988. "Trade Policy Issues and Empirical Analysis," NBER Books, National Bureau of Economic Research, Inc, number bald88-2, June.
    8. Magnus Blomstrom & Linda S. Goldberg, 2001. "Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey," NBER Books, National Bureau of Economic Research, Inc, number blom01-1, June.
    9. Froot, Kenneth A. (ed.), 1994. "Foreign Direct Investment," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226266213, July.
    10. Magnus Blomstrom & Robert E. Lipsey & Lennart Ohlsson, 1989. "What Do Rich Countries Trade with Each Other? R&D and the Composition of U.S. and Swedish Trade," NBER Working Papers 3140, National Bureau of Economic Research, Inc.
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    Cited by:

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    2. Noel Gaston & Ahmed M. Khalid, 2010. "Globalization and Integration in the Asia-Pacific: Prospects and Risks," Chapters, in: Noel Gaston & Ahmed M. Khalid (ed.), Globalization and Economic Integration, chapter 1, Edward Elgar Publishing.
    3. Andrea Elteto & Katalin Antaloczy, 2002. "Outward foreign direct investment in Hungary - motivations and effects," IWE Working Papers 125, Institute for World Economics - Centre for Economic and Regional Studies.
    4. Frank Barry & Holger Gorg & Andrew Mcdowell, 2003. "Outward FDI and the Investment Development Path of a Late-industrializing Economy: Evidence from Ireland," Regional Studies, Taylor & Francis Journals, vol. 37(4), pages 341-349.
    5. Ludo Cuyvers & Michel Dumont & Glenn Rayp & Katrien Stevens, 2005. "Home Employment Effects of EU Firms’ Activities in Central and Eastern European Countries," Open Economies Review, Springer, vol. 16(2), pages 153-174, April.
    6. Frank Barry, 2002. "A Note on Transfer Pricing and the R&D Intensity of Irish Manufacturing," Working Papers 200230, School of Economics, University College Dublin.
    7. Tain-Jy Chen & Ying-Hua Ku, 2003. "The Effects of Overseas Investment on Domestic Employment," NBER Working Papers 10156, National Bureau of Economic Research, Inc.
    8. Yu Cheng Lai & Santanu Sarkar, 2022. "The role of labour unrest and skilled labour on outward foreign direct investment in Taiwan, Republic of China, ROC," The Economic and Labour Relations Review, , vol. 33(2), pages 396-414, June.
    9. Magnus Wiberg, 2020. "Capital controls and the location of industry," The World Economy, Wiley Blackwell, vol. 43(4), pages 871-891, April.
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    11. Naveen Rai & Lena Suchanek & Maria Bernier, 2018. "Does Outward Foreign Investment Matter for Canadian Productivity? Evidence from Greenfield Investments," Staff Working Papers 18-31, Bank of Canada.

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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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