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The Impact of Foreign Direct Investments on Labour Productivity: A Critical Examination of Results

Author

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  • Raluca Georgiana Popescu

    (Ph.D. Candidate, The Academy of Economic Studies,Bucharest, Romania)

Abstract

The paper presents several results concerning the impact of foreign direct investments on labour productivity in different countries. The focus is on the labour productivity differences that exist between the foreign and domestic companies and on the way these differences evolve in the host country. Results show that national companies generally increase their labour productivity due to the technological and managerial competences that they borrow from the foreign companies established in their country and also because: firstly they have to protect themselves from the new competition and secondly they must comply with the growing demand coming from the new investors. Due to their higher labour productivity, foreign firms offer higher wages to their employees. This also determines a growth in the salaries of national companies’ skilled workers going to wage inequalities and skill differences. However, the overall effect of a growing productivity is most oftenly translated into job creation.

Suggested Citation

  • Raluca Georgiana Popescu, 2011. "The Impact of Foreign Direct Investments on Labour Productivity: A Critical Examination of Results," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 14(39), pages 115-132, March.
    • Handle: RePEc:rej:journl:v:14:y:2011:i:39:p:115-132
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    File URL: http://www.rejournal.eu/sites/rejournal.versatech.ro/files/articole/2011-02-28/2103/popescu-je39.pdf
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    Cited by:

    1. Hykmete Bajrami & Nazmi Zeqiri, 2019. "Theories of Foreign Direct Investment (FDI) and the Significance of Human Capital," International Journal of Business and Management, International Institute of Social and Economic Sciences, vol. 7(1), pages 11-24, May.

    More about this item

    Keywords

    F16; F21; F23; J24; O24.;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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