Working Paper: CEPR ID: DP931
Authors: Magnus Blomström; Ari Kokko
Abstract: This paper examines two broad issues related to foreign investment by Swedish multinational corporations (MNCs): first, the effects of outward foreign direct investment on domestic investment, exports and employment, and second, the effects on the domestic economy from the increasing division of labour between the parents and foreign affiliates of Swedish MNCs. The paper summarizes and synthesizes the existing empirical evidence on these matters (much of which has hitherto only been available in Swedish) and discusses some possible long-run effects that have received little attention in the literature.
Keywords: foreign investment; multinational firms; home country effects; sweden
JEL Codes: F23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Swedish outward foreign direct investment (FDI) (F21) | Swedish exports (F10) |
| Swedish outward foreign direct investment (FDI) (F21) | larger foreign market shares for Swedish MNCs (F23) |
| larger foreign market shares for Swedish MNCs (F23) | higher exports and employment in Sweden (F10) |
| Swedish outward foreign direct investment (FDI) (F21) | increase in intermediate goods exports to foreign affiliates (F10) |
| increase in intermediate goods exports to foreign affiliates (F10) | offset losses in finished product exports (F14) |
| Swedish plants shifting from producing finished goods to intermediate inputs (L23) | implications for domestic industry structure and employment (L16) |