Hollowing Out or Filling In? Impacts of Multinational Enterprises on Domestic Plant Turnover and Job Growth in Factory Asia

Recently multinational enterprises (MNEs) originating from Asian countries such as China and Korea have rapidly expanded their global operations, but the employment effect of these MNEs in their home countries has rarely been studied. Using Korean firm–plant matched data over 2008–2013, we examine the effects of MNEs on domestic plant turnover and job growth. We find that Korean MNEs are more likely than non–MNEs to not only close down their domestic manufacturing plants but also open new plants. Along with active plant turnover, Korean MNEs exhibit greater active job reallocation across their domestic manufacturing plants within firms; however, this does not result in net job loss. This suggests that Korean MNEs participating in Factory Asia restructured their domestic manufacturing bases rather than hollowing them out.