Foreign direct investment, global value chains and labour markets

Ernst, Christoph,, Michelena, Gabriel, and Bertin, Pablo,

ILO Working Papers from International Labour Organization

Abstract: Foreign direct investment and the activities of multinational enterprises play an essential role in shaping employment outcomes, particularly in developing and emerging economies. With globalization and the expansion of global value chains, understanding how FDI influences labour markets has become increasingly relevant. This paper quantifies the global employment supported by foreign affiliates, examining both direct and indirect effects across regions and sectors. Our estimates suggest that foreign MNEs supported around 125 million jobs worldwide by 2021, a significant increase from earlier baselines. Employment is geographically concentrated in the European Union, China, North America, and East Asia, with services accounting for over 40 per cent of total MNE-supported jobs, though manufacturing remains key in China. Poorer countries are further marginalized. The contribution of this paper lies in two main areas. First, it provides a consistent global estimate of employment associated with MNEs by combining firm-level datasets with ILO labour statistics. Second, it provides evidence about the heterogeneity of employment effects across regions and sectors: while the European Union, China, North America, and East Asia account for the largest employment shares, a shift towards services in productive activities and employment has been observed, but manufacturing still remains central in countries such as China.

Keywords: foreign investment; value chains.; labour market; multinational enterprise (search for similar items in EconPapers)
Pages: 1 online resource (34 p.) pages
Date: 2026
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Published in ILO working paper series

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Persistent link: https://EconPapers.repec.org/RePEc:ilo:ilowps:995691071902676

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