Outward Investment, Employment, and Wages in Swedish Multinationals
Stockholm School of Economics - Department of Economics; National Bureau of Economic Research (NBER), at New York; Centre for Economic Policy Research (CEPR)
Stockholm School of Economics; National Bureau of Economic Research (NBER)
Oxford Review of Economic Policy, Vol. 16, No. 3, Autumn 2000
Examining detailed data for the home-country operations of 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.
JEL Classification: F23
Date posted: January 22, 2001