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Foreign direct investment and employment rights in South-Eastern Europe

Wood, Geoffrey and Yin, Shuxing and Mazouz, Khelifa and Cheah, Jeremy Eng-Tuck (2016) 'Foreign direct investment and employment rights in South-Eastern Europe.' Cambridge Journal of Economics, 40 (1). pp. 141-163. ISSN 0309-166X

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The dominant neoliberal policy community holds that a reduction in employment rights and social protection is likely to promote economic recovery and growth. It has been suggested that investors are likely to shun countries where such rights are strong; in contrast, radical labour market deregulation is seen as encouraging both local business and multinationals to invest. This study explores whether labour market deregulation in South-Eastern Europe has really encouraged multinationals to invest in the region. We find that the weakening of important aspects of employment rights under the law appears to detract from, rather than encourage, foreign direct investment (FDI). We also show that stronger employment rights are more likely to attract FDI when the host country is located within the European Union. This finding suggests that the complementarities associated with stronger employment rights and more committed labour may offset the overall deterrent effects of the greater regulation associated with EU membership.

Item Type: Article
Uncontrolled Keywords: South-Eastern Europe; Foreign direct investment; Employment rights; Deregulation
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 12 Nov 2015 15:23
Last Modified: 18 Aug 2022 11:38

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