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

Braconier, Henrik; Ekholm, Karolina

doi:10.2139/ssrn.317283

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

Centro Studi Luca d'Agliano Development Studies Working Paper No. 161

38 Pages Posted: 26 Oct 2002

See all articles by Henrik Braconier

Henrik Braconier

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

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)

There are 2 versions of this paper

Date Written: September 10, 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: Suggested Citation

Braconier, Henrik and Ekholm, Karolina, Foreign Direct Investment in Central and Eastern Europe: Employment Effects in the EU (September 10, 2001). Centro Studi Luca d'Agliano Development Studies Working Paper No. 161, Available at SSRN: https://ssrn.com/abstract=317283 or http://dx.doi.org/10.2139/ssrn.317283