The Foreign Direct Investment Job Multiplier During a Resource Boom: Evidence from Mongolia

Nagham Sayour and Marcel Schröder (mschroder@adb.org)
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Marcel Schröder: Asian Development Bank, Postal: No. 6 ADB Avenue, Mandaluyong, Philippines

No 642, ADB Economics Working Paper Series from Asian Development Bank

Abstract: This paper explores the job creation impacts of the large foreign direct investment (FDI) inflows to Mongolia’s non-resource sector following the signing of the investment agreement for the Oyu Tolgoi mine in 2009. Using FDI project and national employment data over 2009–2013, we employ a triple difference methodology on the sector–province (aimag)-year level. The results suggest that each FDI job and every $1 million FDI inflow displace 5.5 and 20 local jobs, respectively. Several factors may explain this result: the majority of FDI was targeted at sectors such as transportation and retail where efficiency gains led to job losses; the low skill-intensity of FDI jobs in those sectors; the low labor supply elasticity in Ulaanbaatar where most of the FDI projects are concentrated; and the limited extent of localized supply chains.

Keywords: resource boom; foreign direct investment; local job multiplier; Mongolia (search for similar items in EconPapers)
JEL-codes: F21 J21 O11 Q32 Q33 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2021-12-15
New Economics Papers: this item is included in nep-dev, nep-int, nep-lma and nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0642

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