Multinationals and Structural Transformation

Vanessa Alviarez, Cheng Chen, Nitya Pandalai-Nayar, Liliana Varela, Kei-Mu Yi and Hongyong Zhang ()
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Hongyong Zhang: https://www.rieti.go.jp/users/zhang-hong-yong/index_en.html

No 2608, Working Papers from Federal Reserve Bank of Dallas

Abstract: We study how multinational corporations (MNCs) shape firm-level and aggregate structural transformation. Using confidential microdata from Japan and exploiting a quasi-exogenous reform that expanded foreign investment opportunities in China, we assess empirically how this reform affected employment at firms in both the host country (China) and the home country (Japan). In liberalized industries, Japanese manufacturing affiliates in China expanded employment, while parent firms in Japan shifted out of manufacturing and into higher-value service activities, including R&D. To assess the broader relevance of this mechanism, we use microdata from several advanced and middle-income economies, and show that MNCs account for the majority of the middle-income countries' reallocation to manufacturing.

Keywords: multinational firms; manufacturing employment; services employment; foreign direct investment liberalization (search for similar items in EconPapers)
JEL-codes: F23 F60 (search for similar items in EconPapers)
Pages: 79
Date: 2026-03-30
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Related works:
Working Paper: Multinationals and Structural Transformation (2023)
Working Paper: Multinationals and Structural Transformation (2022)
Working Paper: Multinationals and Structural Transformation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:102970

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DOI: 10.24149/wp2608

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