Disemployment caused by Foreign Direct Investment? Multinationals and Japanese employment

Kozo Kiyota 27 November 2014

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With the growing activities of multinationals, one of the major concerns for policymakers in developed countries is the disemployment caused by multinationals, especially in the manufacturing sector.[1] For example, increased competition with foreign countries forces firms to relocate their production sites overseas, which results in disemployment in the home country. In particular, the decline in manufacturing jobs is believed to have been the consequence of globalisation.

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Topics:  Labour markets Productivity and Innovation

Tags:  Japan, disemployment, FDI, manufacturing

The shared supplier effect: How foreign firms benefit domestic firms

Hiau Looi Kee 21 November 2014

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The conventional thinking about the impact of foreign direct investment (FDI) in a developing country, is often that while FDI may create jobs, it crowds out and take away market opportunities from domestic enterprises and make the domestic firms less efficient.  These are the so-called negative spillovers of FDI and have been identified in Venezuela (Atkin and Harrison, 1999), the Czech Republic (Djankov and Hoekman, 2000) and Central and Eastern Europe (Konings, 2001).  In a recent study (Kee, forthcoming), I find that there could be a positive spillover of FDI to consider, i.e.

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Topics:  Development

Tags:  FDI, spillovers, Bangladesh

The dragon soars: Micro evidence on Chinese outward direct investment

Heiwai Tang, Wenjie Chen 22 September 2014

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China’s active acquisition of foreign assets has raised anxiety and tension across the world. In 2010, it was the world’s fifth largest source of foreign direct investment after the United States, France, Germany, and Japan.1 He et al. (2012) predict that China’s cumulative outward direct investment (ODI) will exceed $5 trillion USD in 2020, compared to a mere $3 billion in 2010. Given the sheer size of China, the volume of its ODI may be expected; but considering its relatively early stage of development, its recent surge in ODI surprised many.

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Topics:  International trade

Tags:  China, FDI, outward FDI

Why developing host countries sign increasingly strict investment agreements

Eric Neumayer, Peter Nunnenkamp, Martin Roy 01 August 2014

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Conclusive evidence is still missing that signing bilateral investment treaties (BITs) and other international investment agreements helps developing host countries attract more FDI – and, yet, the number of such agreements has mushroomed. What is more, developing countries have witnessed a wave of litigation – and yet they increasingly agreed to stricter FDI-related provisions in international investment agreements, in particular with regard to investor-state dispute settlement (ISDS) mechanisms and pre-establishment national treatment (NT) of foreign investors.

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Topics:  Development International trade

Tags:  developing countries, FDI, international investment agreements

R&D internationalisation during the Global Crisis

Bernhard Dachs, Georg Zahradnik 06 July 2014

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Foreign firms’ share of total business R&D expenditure increased during the last three decades in almost all countries where data is available, but this trend stopped with the Global Crisis of 2008–2009. In most countries, R&D of foreign firms was more severely affected by the crisis than R&D of domestic firms. However, the crisis did not lead to a new global distribution of overseas R&D expenditure.

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Topics:  Global crisis Productivity and Innovation

Tags:  R&D, globalisation, multinationals, FDI, innovation, global crisis, persistence, autonomy, subsidiaries

The economic impact of inward FDI on the US

Theodore H. Moran, Lindsay Oldenski 04 March 2014

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The US is the second-largest recipient of FDI in the world, behind China, and by far the largest target for FDI among OECD countries (OECD 2013). The numbers are large ($253 billion for the US), and the gap with the next-largest in the OECD is impressive ($63 billion for the UK and $62 billion for France in 2012).

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Topics:  Productivity and Innovation

Tags:  R&D, US, productivity, wages, multinationals, FDI, spillovers

With a little help from my friends – FDI in Africa

Holger Görg, Christiane Krieger-Boden, Adnan Seric 10 December 2013

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Foreign direct investment (FDI) and the emergence of multinational firms (MNEs) have proven successful strategies for the growth performance of host countries. In recent years, developing economies have gained substantial shares of such worldwide FDI flows. Now, a “new wave of FDI” has even swept sub-Saharan Africa, one of the poorest regions of the world (Figure 1).

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Topics:  Development International trade

Tags:  Africa, FDI

Is the negative impact of FDI real? Empirical evidence from Japan

Ayumu Tanaka 20 November 2013

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The Japanese government is concerned about the so-called “hollowing out of manufacturing,” referring to the negative effects of FDI on domestic employment. A typical story is described below:

"Japanese firms face severe competition with firms in low-wage Asian countries such as China, Korea, and Taiwan. Many Japanese firms, therefore, establish their overseas subsidiaries in low-wage countries, which results in the manufacturing workers in Japan losing their jobs. To protect them, it is necessary for the government to subsidise Japanese firms."

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Topics:  International trade

Tags:  multinationals, FDI

Quid pro quo: Technology capital transfers for market access in China

Thomas Holmes, Ellen McGrattan, Edward C. Prescott 08 November 2013

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Over the past two decades China’s economy has grown rapidly and the nation has become a major destination for foreign direct investment. Surprisingly, little of China's FDI inflows come from technologically advanced, dominant players in global investment such as the US, Europe, and Japan (Prasad and Wei 2007, Branstetter and Foley 2010). Moreover, while there has been an explosion of patenting in China by domestic applicants, FDI outflows from China to the US, Europe, and Japan remain small.

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Topics:  Global economy International trade

Tags:  China, patents, FDI, intellectual property rights

Not all capital waves are alike: A sector-level examination of surges in FDI inflows

Dennis Reinhardt, Salvatore Dell'Erba 08 July 2013

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Capital flows often come in waves. An extensive literature has documented 'surges' and 'bonanzas' in capital flows (e.g. Forbes and Warnock 2012, Reinhart and Reinhart 2009, Ghosh et al. 2012). While capital flows can bring many benefits the literature has also documented the risks associated with this cyclical nature. Indeed, they can contribute to amplifying economic cycles, fuel credit booms, appreciate the real exchange rate, and can be subject to sudden reversals (Calvo et al. 2008).

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Topics:  International finance

Tags:  FDI, capital flows, surges

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