亚开行-资源繁荣时期的外国直接投资就业乘数：来自蒙古的证据（英）-2021.12-27页_702kb

Summary of "The Foreign Direct Investment Job Multiplier During a Resource Boom: Evidence from Mongolia"

Core Content

This working paper investigates the impact of foreign direct investment (FDI) on job creation in Mongolia's non-resource sectors during the resource boom triggered by the Oyu Tolgoi (OT) investment agreement (IA) signed in 2009. The study uses a triple difference methodology to estimate the local job multiplier effect of FDI inflows and finds that the effect is negative, indicating job displacement rather than job creation.

Main Points

• Resource Booms and Job Creation: Resource booms can lead to significant economic growth, but they are often associated with limited job creation due to the capital and skill intensity of the extractive sector.
• FDI Inflows in Mongolia: After the signing of the OT IA in 2009, there was a substantial increase in FDI inflows to non-resource sectors. This increase was not just a result of the global financial crisis (GFC) but was specifically linked to the IA.
• Job Multiplier Effects: The study estimates that each FDI job created displaces approximately 5.5 local jobs, and each $1 million of FDI inflows results in about 20 local job losses.
• Key Factors Affecting Job Multipliers: The negative job multiplier is attributed to several factors:
  • FDI concentrated in sectors like transportation and retail, which experienced efficiency gains leading to job losses.
  • Low skill-intensity of FDI jobs in these sectors.
  • Limited labor supply elasticity in Ulaanbaatar, where most FDI projects are located.
  • Incomplete localization of supply chains, reducing the positive employment spillovers.

Key Information

FDI Inflows and Employment Trends (2009–2013)

• FDI Projects: 34 non-resource FDI projects were initiated after the IA, totaling $3.25 billion and creating around 4,600 direct jobs.
• Pre-IA FDI: In the 6 years before the IA, there were 24 projects totaling $970 million and creating 2,200 jobs.
• Sectoral Breakdown:
  • Transportation: Created the most direct jobs, accounting for over 50% of total FDI jobs.
  • Retail: Created about one out of six FDI jobs.
  • Professional Services: Created about one out of eight FDI jobs.
  • Other Sectors: Combined, these three sectors accounted for over 80% of all direct FDI jobs.
• Employment Growth:
  • Overall employment increased by almost 100,000 jobs between 2009 and 2013, with a yearly growth rate of 2.3%.
  • The unemployment rate declined from 11.6% in 2009 to 7.9% in 2013.
  • The fastest-growing sectors were financial services, information and communication technology (ICT), and professional services, each with over 10% annual growth.
  • Mining, despite being capital and skill intensive, added 15,000 jobs, mainly due to the labor-intensive construction phase of OT.

Methodology and Findings

• Data Sources: The study uses data from the Financial Times' fDi Markets database and the National Statistics Office of Mongolia (NSOM).
• Triple Difference Model: The model is applied at the sector-aimag-year level to estimate the local job multiplier effect.
• Results:
  • The estimated FDI job multiplier is around -5.5, meaning each FDI job displaces 5.5 local jobs.
  • The estimated FDI inflow multiplier is around -20, implying that every $1 million of FDI inflows results in about 20 job losses.
• Robustness Checks: The findings are robust across different specifications and models, including those that account for trends and other external factors.

Contextual Background

• Oyu Tolgoi Project: The OT project, located in the Southern Gobi Region, was a key driver of the non-resource FDI inflows. The IA was signed in 2009, and the construction phase of the open-pit mine lasted from 2010 to 2013.
• Exogenous Shock: The signing of the IA is considered an exogenous news shock, as it was unpredictable and led to a significant drop in Mongolia's country risk, as seen in Figure 1.
• FDI Characteristics:
  • The number of FDI jobs, total inflows, projects, source economies, and destination sectors all increased significantly after the IA.
  • The results from regression analyses suggest that the IA was the decisive factor behind the surge in non-resource FDI to Mongolia, as opposed to broader regional trends.

Conclusions

• The study highlights that FDI inflows during a resource boom can have a negative job multiplier effect in the non-resource sector of Mongolia.
• This effect is due to the nature of FDI projects and the characteristics of the local labor market.
• The findings contribute to the broader understanding of how FDI impacts employment in resource-rich developing economies, emphasizing the importance of considering localized supply chains and labor market dynamics.