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Foreign direct investment and employment rights in South-Eastern Europe

Wood, Geoffrey, Yin, Shuxing, Mazouz, Khelifa ORCID: 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. 10.1093/cje/beu070

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The dominant neo-liberal 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. We also show that stronger employment rights are more likely to attract FDI when the host country is located with the EU. This finding suggests that the complementarities associated with stronger employment rights and more committed labour (see Hall and Soskice, 2001) may offset the overall deterrent effects of the greater regulation associated with EU membership.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HF Commerce
Uncontrolled Keywords: : South Eastern Europe, foreign direct investment, employment rights, deregulation
Publisher: Oxford University Press
ISSN: 0309-166X
Date of First Compliant Deposit: 30 March 2016
Date of Acceptance: 23 June 2014
Last Modified: 29 Oct 2022 11:41

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