Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden

21 Pages Posted: 30 Aug 2000

See all articles by Magnus Blomstrom

Magnus Blomstrom

Stockholm School of Economics - Department of Economics; National Bureau of Economic Research (NBER), at New York; Centre for Economic Policy Research (CEPR)

Gunnar Fors

Research Institute of Industrial Economics (IFN)

Robert E. Lipsey

National Bureau of Economic Research (NBER) at New York (Deceased)

Date Written: October 1997

Abstract

We compare the relation between foreign affiliate production and parent employment in U.S. manufacturing multinationals with that in Swedish firms. U.S. multinationals appear to have allocated some of their more labor intensive operations selling in world markets to affiliates in developing countries, reducing the labor intensity in their home production. Swedish multinationals produce relatively little in developing countries and most of that has been for sale within host countries with import-substituting trade regimes. The great majority of Swedish affiliate production is in high-income countries, the U.S. and Europe, and is associated with more employment, particularly blue-collar employment, in the parent companies. The small Swedish-owned production that does take place in developing countries is also associated with more white-collar employment at home. The effects on white-collar employment within the Swedish firms have grown smaller and weaker over time.

Suggested Citation

Blomstrom, Magnus and Fors, Gunnar and Lipsey, Robert E., Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden (October 1997). NBER Working Paper No. w6205. Available at SSRN: https://ssrn.com/abstract=225963

Magnus Blomstrom (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46 8 736 9265 (Phone)
+46 8 342 818 (Fax)

National Bureau of Economic Research (NBER), at New York

365 Fifth Avenue, 5th Floor
New York, NY 10016-4309
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Gunnar Fors

Research Institute of Industrial Economics (IFN)

Grevgatan 34, 2nd floor
S-114 85 Stockholm, SE-102 15
Sweden

Robert E. Lipsey

National Bureau of Economic Research (NBER) at New York (Deceased)

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