2014年-CEPS欧洲政策研究中心_Skill_Upgrading_and_Production_Transfer_within_Swedish_Multinationals_in_the_1990s_28页_92kb

Summary of "Skill Upgrading and Production Transfer within Swedish Multinationals in the 1990s"

Core Content

This paper investigates the relationship between production transfer in Swedish-headquartered multinational enterprises (MNEs) and skill upgrading in Swedish manufacturing during the 1990s. It distinguishes between horizontal and vertical foreign direct investment (FDI) and analyzes their differential impacts on the demand for skilled labor in parent companies.

Main Points

1. Theoretical Background

• MNEs are categorized into horizontal and vertical based on how they organize production.
  • Horizontal MNEs produce the same product or service across different locations with similar factor intensities.
  • Vertical MNEs fragment production into stages, with each stage using different proportions of factors (e.g., skilled vs. unskilled labor).
• Vertical FDI is driven by the desire to exploit factor price differences, especially in low-income countries.
• Horizontal FDI is more common in developed countries and is associated with multi-plant economies of scale.
• The paper builds on existing models and empirical studies, particularly those by Slaughter (2000) and Berman, Bound & Grilliches (1994).

2. Empirical Studies on FDI and Parent Employment

• Blomström, Fors & Lipsey (1997) found that increased foreign production is associated with higher skilled employment in Swedish parent firms.
• They argue that MNEs need more supervisory and auxiliary staff in the home country to manage foreign operations.
• However, their findings are inconsistent with the idea that skilled labor is being substituted abroad.
• Braconier & Ekholm (2000) also studied the effect of FDI on Swedish parent employment but did not differentiate between skilled and unskilled labor.

3. Key Findings from the Paper

• There is a significantly positive effect of increased employment in non-OECD affiliates on skill upgrading in Swedish MNE parents.
• There is no significant effect on skill upgrading from changes in employment in OECD affiliates, consistent with the predictions of horizontal MNE models.
• This suggests that vertical FDI has a greater impact on skill upgrading than horizontal FDI.
• The non-OECD employment share in Swedish MNEs increased from ~58% in 1990 to ~64% in 1997, indicating a shift in production to these regions.
• The increase in non-OECD employment was mainly driven by Central and Eastern European Countries (CEECs), due to the availability of cheap labor.
• In Latin America and Asia, employment in MNE affiliates decreased, but China contributed to an increase in Asia.

4. Skill Share and R&D Intensity

• Between 1990 and 1997, MNE parents shifted their employment mix more sharply towards skilled labor than the overall manufacturing sector.
  • Skill share in MNE parents increased by 8.3 percentage points, while in overall manufacturing it increased by 5.0 percentage points.
• R&D intensity in MNE parents is 9 percentage points higher than in overall manufacturing.
• Despite the assumption that Swedish MNEs might be moving their most skill-intensive production abroad, R&D intensity in Swedish manufacturing actually increased relative to other OECD countries, contradicting this idea.

Key Information

• Data Sources:
  • Statistics on International Business (SIB) for employment data.
  • Regional Labour Statistics for skill and labor breakdown.
• Time Period:
  • 1990–1997, a period marked by increased non-OECD FDI and decline in traditional OECD FDI.
• Methodology:
  • Employs a nonhomothetic translog cost function to estimate the impact of MNE production transfer on skill upgrading.
  • Uses regression analysis at both industry and firm levels.
  • Independent variables include:
    • Changes in non-OECD employment share (vertical FDI)
    • Changes in OECD employment share (horizontal FDI)
    • R&D intensity
    • Computer use as a proxy for technological change.

Conclusion

• The paper concludes that vertical FDI in non-OECD countries has had a positive and significant impact on skill upgrading in Swedish MNE parents.
• In contrast, horizontal FDI in OECD countries has no effect on the skill share in parent firms.
• This supports the new MNE models that predict skill upgrading in home countries due to vertical FDI.
• The R&D intensity data also supports the idea that Swedish MNEs are not moving high-skill activities abroad, which challenges some policy conclusions drawn from earlier studies.
• The empirical results suggest that production transfer in Swedish MNEs is more skill-enhancing than previously thought, especially in non-OECD affiliates.

Tables Summary

• Table 1: Shows the employment distribution between Swedish MNE parents, OECD and non-OECD affiliates, and overall Swedish manufacturing. The share of employment in non-OECD affiliates increased significantly.
• Table 2: Highlights the employment growth in different non-OECD regions, with the CEECs showing the most significant increase.
• Table 3: Compares skilled and less-skilled employment and skill share between MNE parents and overall manufacturing, showing a greater shift towards skilled labor in MNE parents.
• Table 4: Presents the regression results at the industry level, showing a positive and significant impact of non-OECD FDI on skill upgrading, while OECD FDI has no effect.

Implications

• The findings have important policy implications, suggesting that Sweden’s manufacturing sector is skill-upgrading due to vertical FDI.
• The paper challenges the assumption that increased FDI in low-wage countries leads to loss of skilled jobs in Sweden.
• It also emphasizes the importance of distinguishing between horizontal and vertical FDI when analyzing the effects on labor markets and skill demand.