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Multinational Firms: Easy Come, Easy Go?

Wooton, I. and Haaland, J.I. and Faggio, G. (2003) Multinational Firms: Easy Come, Easy Go? FinanzArchiv, 59 (1). pp. 3-26. ISSN 0015-2218

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Abstract

It is often argued that countries with more flexible labor markets are better placed in attracting inward investment from multinational firms (MNEs). This is an issue when there is uncertainty in the marketplace and the firm faces some risk of closure of its branch plant. We study the MNE's location choice, explicitly taking into account exit, as well as entry, costs. We show that worker protection, through lay-off rules, deters potential investment in risky industries. Using evidence on MNE investment in Eastern Europe, we find support for our prediction that labor-market flexibility makes a location more attractive to the MNE.

Item type: Article
ID code: 15315
Keywords: multinational firms, MNEs, Economic Theory, Finance
Subjects: Social Sciences > Economic Theory
Department: Strathclyde Business School > Economics
Related URLs:
    Depositing user: Mrs Kirsty Fontanella
    Date Deposited: 08 Feb 2010 12:28
    Last modified: 04 Sep 2014 21:47
    URI: http://strathprints.strath.ac.uk/id/eprint/15315

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