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Multinational investment, industry risk, and policy competition

Haaland, Jan Ingvald Meidell; Wooton, Ian
Working paper
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dp2001-35.pdf (103.7Kb)
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http://hdl.handle.net/11250/162956
Utgivelsesdato
2001-12
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  • Discussion papers (SAM) [586]
Sammendrag
In an uncertain business climate, multinational enterprises must take account

of future exit costs in deciding where to locate a branch plant. We study how

differences in national labour-market conditions between countries influence

this decision. Other things equal, the most attractive location has a flexible

labour market (low closure costs) together with a low opportunity cost of

employment (high unemployment). In a game between two countries, a nation

with an inflexible labour market and high unemployment will succeed in

attracting low-risk firms, while that with more flexible labour markets and low unemployment will win the game for higher risk firms.
Utgiver
Norwegian School of Economics and Business Administration. Department of Economics
Serie
Discussion paper
2001:35

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