Picture of a sphere with binary code

Making Strathclyde research discoverable to the world...

The Strathprints institutional repository is a digital archive of University of Strathclyde research outputs. It exposes Strathclyde's world leading Open Access research to many of the world's leading resource discovery tools, and from there onto the screens of researchers around the world.

Explore Strathclyde Open Access research content

Domestic labour markets and foreign direct investment

Haaland, Jan I. and Wooton, Ian (2007) Domestic labour markets and foreign direct investment. Review of International Economics, 15 (3). pp. 462-480. ISSN 0965-7576

Full text not available in this repository. (Request a copy from the Strathclyde author)

Abstract

We study how the labor market and industry uncertainty affect the investment decisions of multinational enterprises (MNEs). In an uncertain business climate, MNEs must take account of the future in deciding where to locate a branch plant. When wages are endogenously determined, both the opportunity cost of labor and redundancy payments influence the MNE's decision. When countries compete for foreign investment, different national characteristics determine the winners in different industries. Differences in risk may draw MNEs to different locations. Firm-specific bargaining always offers an advantage, as the mix of current and future pay fully reflects the firm's risk profile.