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Foreign direct investment and employment rights in South-Eastern Europe

Wood, G and Yin, S and Mazouz, K and Cheah, JET (2015) 'Foreign direct investment and employment rights in South-Eastern Europe.' Cambridge Journal of Economics, 40 (1). 141 - 163. ISSN 0309-166X

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Abstract

© The Author 2014. 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
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Faculty of Social Sciences > Essex Business School
Depositing User: Jim Jamieson
Date Deposited: 12 Nov 2015 15:23
Last Modified: 05 Feb 2019 12:15
URI: http://repository.essex.ac.uk/id/eprint/15448

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