 The impact of employment protection on FDI at different stages of economic developmentSulistiyo K. Ardiyono and Arianto Patunru The World Economy, 2022, vol. 45, issue 12, 3679-3714 Abstract: There has been much debate on how to design employment protection regulations that balance the need to attract foreign direct investment (FDI) on the one hand and to protect workers' rights on the other hand. This study explores this ‘dilemma’, using a multi‐country dataset from 2003 to 2015 and treating hiring and firing regulation (HFR) and the other explanatory variables as endogenous. The findings indicate that flexible HFR is essential for FDI promotion in the early stages of economic development of a country, but the impact of labour market flexibility on FDI gradually decreases and eventually turns statistically insignificant with economic advancement. In other words, a flexible HFRs are more important for developing countries, but such flexibility does not have to be sustained in a ‘race to the bottom’ manner: once a country reaches higher income levels, it has more room to focus on labour standards to protect workers without compromising on the attractiveness of the country for FDI. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:45:y:2022:i:12:p:3679-3714 Ordering information: This journal article can be ordered from Access Statistics for this article The World Economy is currently edited by David Greenaway More articles in The World Economy from Wiley Blackwell |
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