Keywords
FOREIGN DIRECT INVESTMENTENVIRONMENTAL STANDARDS
EXCHANGE RATE
FOREIGN INVESTMENT
LABOR REGULATIONS
INTERMEDIATE INPUTS
INTERNATIONAL ECONOMICS
LABOR MARKET REGULATIONS
DEVELOPMENT INDICATORS
ACCOUNTING
LABOR MARKET FLEXIBILITY
INTELLECTUAL PROPERTY
ABATEMENT COSTS
POLLUTION ABATEMENT
SERVICES
MARKET SIZE
TAXATION
LEGISLATION
SUBSIDIARY
INTELLECTUAL PROPERTY RIGHTS
BUSINESS FINANCING
FOREIGN SUBSIDIARIES
LABOR INFORMATION
ECONOMIC REVIEW
SUBSIDIARIES
INTERNATIONAL INVESTMENT
CORRUPTION
COLLECTIVE ACTIONS
INVESTMENT INFLOWS
INVESTMENT FLOWS
ECONOMIC ACTIVITY
GOVERNANCE INDICATORS
INVESTMENT INCENTIVES
PROPERTY RIGHTS
LABOR COSTS
INTERNATIONAL TRADE
FOREIGN EXCHANGE
FOREIGN OWNERSHIP
EMPIRICAL ANALYSIS
INVESTORS
LABOR LAWS
TRANSITION ECONOMIES
INVESTMENT LOCATION
SEVERANCE PAYMENTS
EMPLOYMENT
TRANSITION ECONOMIES
TAX RATE
LAWS
LABOR MARKETS
FOREIGN INVESTORS
FOREIGN EXCHANGE CONTROLS
FOREIGN SUBSIDIARY
LABOR MARKET
POLICY RESEARCH
ECONOMIC PERSPECTIVES
GOVERNMENT REGULATIONS
INVESTMENT CLIMATE
FOREIGN FIRMS
TAX RATES
POLLUTION
FOREIGN INVESTORS
LABOR MARKET RIGIDITIES
TRANSPARENCY FOREIGN DIRECT INVESTMENT
CAPITAL FLOWS
TRANSITION COUNTRIES
MULTINATIONAL COMPANIES
LABOR MARKETS
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http://hdl.handle.net/10986/14298Abstract
The authors take a new look at the regulatory determinants of foreign direct investment (FDI) by asking whether labor market flexibility affects FDI flows across 25 Western and Eastern European countries. Their analysis is based on firm level data on new investments during the 1999-2001 period. The authors employ a variety of labor market flexibility measures that capture different aspects of labor laws along with a comprehensive set of controls for business climate characteristics. Indices of labor market regulations reflect the flexibility of individual and collective dismissals, the length of the notice period, and the required severance payment. The results suggest that greater flexibility in the host country's labor market relative to that in the investor's home country is associated with larger FDI inflows, and this effect is found to be stronger in the case of transition economies. The findings indicate that as the labor market flexibility in the host country increases from inflexible (for example, Slovakia) to flexible (for example, Hungary), the volume of investment increases by between 14 and 18 percent. FDI in service sectors appears to be more affected than investments in manufacturing.Date
2013-07-01Identifier
oai:openknowledge.worldbank.org:10986/14298http://hdl.handle.net/10986/14298
Copyright/License
CC BY 3.0 UnportedCollections
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