To read this content please select one of the options below:

The effects of Belgian outward direct investment in European high‐wage and low‐wage countries on employment in Belgium

Ludo Cuyvers (Centre for ASEAN Studies, University of Antwerp, Antwerp, Belgium, and North‐West University, Potchefstroom Campus, Potchefstroom, South Africa)
Reth Soeng (Flemish Centre for International Policy, and Centre for ASEAN Studies, University of Antwerp, Antwerp, Belgium)

International Journal of Manpower

ISSN: 0143-7720

Article publication date: 14 June 2011

1014

Abstract

Purpose

The paper aims at providing evidence on the impact on employment of outward foreign direct investment, particularly from developed countries into low‐wage countries, which is a major concern in many developed countries.

Design/methodology/approach

The effects of foreign production undertaken by Belgian foreign‐oriented companies on employment in Belgium are investigated by performing econometric tests for complementarity or substitution between home and affiliate employment. The data are from the Amadeus database and consist of a sample of 254 Belgian parent companies with foreign affiliates in low‐wage and other high‐wage European countries during the 1999‐2007 period.

Findings

The results show that, given the size of parent production in the home country, Belgian multinational enterprises with foreign affiliates in higher‐wage European countries tend to employ more labour at home the more they produce in the host country. This probably reflects the needs of foreign affiliates in higher‐wage European countries for management and supervisory services from parent companies. Another explanation might be that Belgian outward FDI is largely vertical. In contrast, no evidence is found about employment reallocation between parents and affiliates operating in lower‐wage European countries.

Originality/value

The paper provides evidence on overall effects on employment in Belgium of its outward foreign direct investment for the period 1999‐2007, i.e. using the most recent data available. In contrast to many other studies, statistical diagnostic tests were carried out to choose the appropriate model to best fit the data.

Keywords

Citation

Cuyvers, L. and Soeng, R. (2011), "The effects of Belgian outward direct investment in European high‐wage and low‐wage countries on employment in Belgium", International Journal of Manpower, Vol. 32 No. 3, pp. 300-312. https://doi.org/10.1108/01437721111136778

Publisher

:

Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

Related articles