Unionisation and foreign direct investment: challenging conventional wisdom?

Dermot Leahy, Catia Montagna

    Research output: Contribution to journalArticle

    54 Citations (Scopus)

    Abstract

    This paper investigates the effects of different degrees of wage setting centralisation on (1) the incentive of a MNE to locate in a host country, (2) the optimal level of investment it decides to commit to its foreign operation, and (3) the host country’s welfare. Decentralised and centralised wage bargaining are considered. The nature of product market competition between the MNE and domestic firms affects results which cast doubt on some of the conventional wisdom on FDI. In particular, we show that: (i) it is not always welfare improving to attract inward FDI, and (ii) the MNE may prefer centralised to decentralised wage setting regimes.
    Original languageEnglish
    Pages (from-to)80
    Number of pages92
    JournalEconomic Journal
    Volume110
    Issue number462
    DOIs
    Publication statusPublished - 2000

    Fingerprint

    Multinational enterprises
    Wisdom
    Foreign direct investment
    Unionization
    Wage setting
    Host country
    Domestic firms
    Wage bargaining
    Centralization
    Incentives
    Product market competition

    Keywords

    • FDI
    • Unionisation
    • Strategic behaviour

    Cite this

    Leahy, Dermot ; Montagna, Catia. / Unionisation and foreign direct investment: challenging conventional wisdom?. In: Economic Journal. 2000 ; Vol. 110, No. 462. pp. 80.
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    Unionisation and foreign direct investment: challenging conventional wisdom? / Leahy, Dermot; Montagna, Catia.

    In: Economic Journal, Vol. 110, No. 462, 2000, p. 80.

    Research output: Contribution to journalArticle

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