Winners and Losers of Multinational Firm Entry into Developing Countries: Evidence from the Special Economic Zones of the People’s Republic of China

Abstract

This paper examines the potential for sector-specific productivity growth, human capital, credit markets, and infrastructure to contribute to the development of stable, well-paid employment in rural areas of low-income countries. Particular emphasis is placed on the way that different sectors of the rural economy interact with each other and with local and regional product markets. A simple theoretical framework and descriptive analysis of panel data from India suggests that more emphasis should be placed on increasing the production of goods that incorporate local agricultural products as inputs.

Keywords: agriculture, wages, migrants, income, urban migrants, rural-urban migration, rural households, urban-rural divide, employment quality, education quality, urbanization, industrialization, effect of migration, special economic zones, foreign direct investment, productivity growth, nonfarm employment

JEL Classification: F13, F16