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Foreign Direct Investment in Central and Eastern Europe: Employment Effects in the EU

41 Pages Posted: 21 Nov 2001  

Henrik Braconier

Research Institute of Industrial Economics (IUI); Ministry of Finance

Karolina Ekholm

Stockholm School of Economics - Department of Economics; Centre for Economic Policy Research (CEPR); Center for Business and Policy Studies (SNS); CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: November 2001

Abstract

We use firm-level data on Swedish multinationals to analyze how the recent expansion of affiliate employment in Central and Eastern Europe (CEE) has affected affiliate employment elsewhere. According to our results, employment in affiliates located in other low-wage countries in Europe decreased substantially as a consequence of the expansion in CEE. Furthermore, affiliate activities in these countries have become more sensitive to changes in labor costs as firms have set up production in CEE. We find that employment in Sweden and other high-wage European countries has also been affected, but these effects seem to be much smaller.

Keywords: Foreign direct investment, multinational enterprises, Central and Eastern Europe

JEL Classification: F23

Suggested Citation

Braconier, Henrik and Ekholm, Karolina, Foreign Direct Investment in Central and Eastern Europe: Employment Effects in the EU (November 2001). CEPR Discussion Paper No. 3052. Available at SSRN: https://ssrn.com/abstract=290524

Henrik Braconier (Contact Author)

Research Institute of Industrial Economics (IUI) ( email )

P.O. Box 5501
S-114 85 Stockholm
Sweden
+46 8 665 4537 (Phone)
+46 8 665 4599 (Fax)

Ministry of Finance ( email )

Drottinggatan 21
Stockholm 10333
Sweden

Karolina Ekholm

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46 8 736 9220 (Phone)
+46 8 313 207 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Center for Business and Policy Studies (SNS)

Skoldungagatan 2, Box 5629
S-114 86 Stockholm
Sweden

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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