How Does Investing in Cheap Labour Countries Affect Performance at Home? France and Italy
Giorgio Barba Navaretti (),
Davide Castellani () and
Anne-Célia Disdier ()
No 5765, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Transferring low tech manufacturing jobs to cheap labour countries is often seen by part of the general public and policy makers as a step into the de-industrialisation of the European economies. However, several recent contributions have shown that the effects on home economies are rarely negative and often positive. Our paper contributes to this literature by examining how outward investments to cheap labour countries affect home activities of a sample of French and Italian firms that turn multinational in the period analysed. The effects of these investments are also compared to the effects of outward investments to developed economies. The analysis is carried out by using propensity score matching in order to build an appropriate counterfactual of national firms. This provides the hypothetical benchmark of what would have happened to domestic activities if firms had not invested abroad. We find no evidence of a negative effect of outward investments to cheap labour countries. In Italy they enhance the efficiency of home activities, with also positive long term effect on output and employment. For France we find a positive effect on the size of domestic activity. Investments to developed economies from both countries have essentially scale effects which eventually trickle down on employment and productivity at home.
Keywords: multinational firms; productivity; propensity score matching (search for similar items in EconPapers)
JEL-codes: C14 D21 F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (38) Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at firstname.lastname@example.org
Working Paper: How Does Investing in Cheap Labour Countries Affect Performance at Home? France and Italy (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:cpr:ceprdp:5765
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=5765
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Series data maintained by (). This e-mail address is bad, please contact .