Outward Investment, Employment, and Wages in Swedish Multinationals

Posted: 22 Jan 2001

See all articles by Magnus Blomstrom

Magnus Blomstrom

Stockholm School of Economics - Department of Economics; National Bureau of Economic Research (NBER), at New York; Centre for Economic Policy Research (CEPR)

Ari Kokko

Stockholm School of Economics; National Bureau of Economic Research (NBER)

Abstract

Examining detailed data for the home-country operations of Swedish multinationals during the period 1986-94, this paper shows that there are signs of very notable structural changes in the home-country operations of these corporations. It also shows that the effects vary according to economic conditions in the home country. In the 1980s, when the Swedish economy was characterized by high taxes, high inflation rates, and a tight labour market, relatively attractive jobs within the multinational corporations (MNCs) were relocated from Swedish plants to foreign affiliates. In the 1990s, by contrast, when the financial crisis had necessitated a host of micro- and macroeconomic reforms, the location decision of the MNCs were more favourable for the Swedish economy. New jobs created by the multinationals were found in activities with high productivity and wages. Thus, home-country effects of foreign direct investment seem, to a large extent, to be determined by the home countries' economic environment.

JEL Classification: F23

Suggested Citation

Blomstrom, Magnus and Kokko, Ari, Outward Investment, Employment, and Wages in Swedish Multinationals. Available at SSRN: https://ssrn.com/abstract=254123

Magnus Blomstrom (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
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+46 8 736 9265 (Phone)
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National Bureau of Economic Research (NBER), at New York

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Centre for Economic Policy Research (CEPR)

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Ari Kokko

Stockholm School of Economics ( email )

P.O. Box 6501
Stockholm
Sweden
+46 8 736 9365 (Phone)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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