Outward FDI Does Not Necessarily Cost Domestic Employment of MNEs at Home

Whether outward foreign direct investment (FDI) projects boost or shrink domestic employment of multinational enterprises (MNEs) in home countries has long been a subject of debate. This study explores this argument with a sample of 604 Japanese MNEs that had established 2,345 foreign affiliates operating in 22 industries (including both manufacturing and service sectors) across 58 countries from 1991 to 2010. In general, the findings suggest that outward FDI of Japanese MNEs increases their domestic employment when it enhances the MNEs’ competitive advantages and hence further expands domestic operations, whereas it reduces domestic employment when it involves a transfer or relocation of domestic operations in foreign countries.

*This publication comes from Hyeock Lee, Shige Makino and Eunsuk Hong, "Outward FDI does not necessarily cost domestic employment of MNEs at home: Evidence from Japanese MNEs," Columbia FDI Perspectives, No. 148, May 25, 2015 (http://ccsi.columbia.edu/files/2013/10/No-148-Lee-Makino-and-Hong-FINAL.pdf). It is posted with the gracious permission of the Columbia Center on Sustainable Investment (www.ccsi.columbia.edu).

**Posting of this report does not represent an endorsement by the Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations and has been done to facilitate research and promote debate about multinational corporations/FDI in and from East Asia.