The Effect of Outward Foreign Direct Investments on Home Employment: Evidence using Swiss Firm-Level Data
Abstract
This paper investigates the effect of outward foreign direct investments (FDI) on home employment in an understudied context - a small economy with a large relative outward FDI stock. Using Swiss firm-level data we construct a novel instrumental variable to identify a direct negative displacement effect and an indirect positive output effect. We find that FDI to high-income countries have a positive effect on domestic jobs, while FDI to lower middle-income countries are associated with a loss of domestic jobs. Further, FDI to low-income countries tend to have a positive effect on home employment. Overall, the effect of outward FDI on home employment is small and tends to create more domestic jobs than it relocates.
Date Issued
2020
Publication Type
Working Paper
Language(s)
en
Additional Credits
Publisher
CRED Center for Regional Economic Development
Access(Rights)
open.access