Outward investment, employment, and wages in Swedish multinationals

Examining detailed data for the home-country operations of Swedish multinat ionals during the period 1986-94, this paper shows that there are signs of very notable structural changes in the home-country operations of these cor porations. It also shows that the effects vary according to economic condit ions in the home country. In the 1980s, when the Swedish economy was charac terized by high taxes, high inflation rates, and a tight labour market, rel atively attractive jobs within the multinational corporations (MNCs) were r elocated from Swedish plants to foreign affiliates. In the 1990s, by contra st, when the financial crisis had necessitated a host of micro- and macroec onomic reforms, the location decision of the MNCs were more favourable for the Swedish economy. New jobs created by the multinationals were found in a ctivities with high productivity and wages. Thus, home-country effects of f oreign direct investment seem, to a large extent, to be determined by the h ome countries' economic environment.