Foreign Direct Investment And Labor Rights: A Panel Analysis Of Bilateral FDI Flows

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Executive Summary

The paper analyses the impact of fundamental labor rights on bilateral FDI flows to 82 developing countries. The results indicate that investments by multinationals are significantly higher in countries that adhere to labor rights, thereby refuting the hypothesis that repression of these rights fosters FDI. Policymakers around the world lure multinational enterprises in order to boost productivity and growth. However, poor and small host countries may have little to offer to attract FDI - except perhaps abundant and cheap labor.

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