THE IMPACT OF OUTWARD FDI ON HOME-COUNTRY EMPLOYMENT IN A LOW-COST TRANSITION ECONOMY

Jaan Masso (), Urmas Varblane and Priit Vahter

No 52, University of Tartu - Faculty of Economics and Business Administration Working Paper Series from Faculty of Economics and Business Administration, University of Tartu (Estonia)

Abstract: The current extensive literature on the home-country employment effect of FDI focuses almost exclusively on the case of investments from high-income and high labour cost home countries. In our paper we analyse the home-country employment effect in Estonia as a low- cost medium-income transition economy. The data from the population of Estonian firms between 1995 and 2002 was studied with regression analysis and propensity score matching in order to construct an appropriate counterfactual for the firms that have invested abroad. The results indicate that in general, outward FDI had a positive impact on the home-country employment growth. Concerning direct investors (domestic firms investing abroad) and indirect investors (foreign-owned firms investing abroad), the former group had a stronger home- country employment effect due to their smaller pre-investment size and because the subsidiaries of indirect investors are served from other locations rather than from Estonia. The positive employment effect was much stronger in the case of investments made after 1999 due to the better macro-economic performance of Estonia from the year 2000 onwards. Services firms demonstrated a stronger home-country employment effect than manufacturing firms. Our results imply that the logic of the outward investments from low-cost transition and developing economies differs from that of high-income countries.

Keywords: outward foreign direct investments; employment effects of FDI; Central- and Eastern Europe; transition (search for similar items in EconPapers)
JEL-codes: D21 F23 J23 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2007
New Economics Papers: this item is included in nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://mjtoimetised.ut.ee/febpdf/febawb52.pdf (application/pdf)

Related works:
Chapter: THE IMPACT OF OUTWARD FDI ON HOME-COUNTRY EMPLOYMENT IN A LOW-COST TRANSITION ECONOMY (2010)
Working Paper: The Impact of Outward FDI on Home-Country Employment in a Low-Cost Transition Economy (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mtk:febawb:52

Access Statistics for this paper

More papers in University of Tartu - Faculty of Economics and Business Administration Working Paper Series from Faculty of Economics and Business Administration, University of Tartu (Estonia) Contact information at EDIRC.
Bibliographic data for series maintained by Liis Roosaar ().