Comparative Economic Studies

, Volume 49, Issue 1, pp 61–80 | Cite as

Determinants of Employment Growth at MNEs: Evidence from Egypt, India, South Africa and Vietnam

  • Sumon Kumar Bhaumik
  • Saul Estrin
  • Klaus E Meyer
Article

Abstract

Many foreign investment operations into emerging markets are small, and are likely to have only a limited impact on the local economy. However, host governments often expect transfer of advanced technology from multinational enterprises (MNEs) operating in these markets to local firms by way of inter-firm mobility of skilled labourers. The extent of such transfers would be limited, among other factors, by the size of the pool of skilled labourers that can potentially be mobile between MNEs and local firms. This, in turn, is determined by employment growth at the MNEs. We develop an empirical specification that models this employment growth, by drawing on both the economics and international business literature. This model is then estimated using firm-level data from four emerging markets. We find that wholly owned foreign direct investment operations have higher employment growth, while local industry and institutional characteristics moderate the growth effect. This suggests that policies encouraging foreign investors to set up in form of joint ventures may not actually raise the benefits for the host economy.

Keywords

MNE employment growth control institutions 

JEL Classifications

O13 O33 J21 F23 

Notes

Acknowledgements

We are grateful to Simon Commander, Stephen Gelb, Danchi Tan, two anonymous referees and editor Jeffrey Miller for helpful comments, to the Egyptian, Indian, South African and Vietnamese country teams for the collection of data, and to Caitlin Frost, Maria Bytchkova, Gherardo Girardi for excellent research assistantship. We remain responsible for all remaining errors. The research was made possible by a research grant from the UK's Department for International Development.

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Copyright information

© Palgrave Macmillan Ltd 2007

Authors and Affiliations

  • Sumon Kumar Bhaumik
    • 1
  • Saul Estrin
    • 2
  • Klaus E Meyer
    • 3
  1. 1.Brunel Business School, Brunel UniversityUxbridge, MiddlesexUK
  2. 2.London Business SchoolUK
  3. 3.University of ReadingUK

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