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Multinational Resilience or Dispensable Jobs? German FDI and Employment in the Czech Republic Around the Great Recession

Michael Moritz (), Bastian Stockinger and Merlind Trepesch

Prague Economic Papers, 2017, vol. 2017, issue 3, 345-359

Abstract: This article investigates the employment development in Czech-based firms in German ownership in the years around the Great Recession of 2008/2009. The intense involvement of German firms in the economy of the neighbouring country via foreign direct investment (FDI) raises a question whether under the conditions of a historically deep global downturn, the Czech employees in multinational companies were confronted with an increased volatility of their jobs. Using a unique firm-level dataset, we contrast the affiliates of German investors with purely Czechowned enterprises. Our findings indicate that in the years before the crisis, firms with German capital exhibited a noticeably more positive employment development. The results from the year 2008 onwards give reason to the conclusion that the German-owned firms played a stabilizing role for the Czech labour market during the recession.

Keywords: foreign direct investment; Germany; financial crisis; the Czech Republic; multinational firms; employment volatility (search for similar items in EconPapers)
JEL-codes: F23 G01 J21 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Multinational resilience or dispensable jobs?: German FDI and employment in the Czech Republic around the Great Recession (2015) Downloads
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