Does German foreign direct investment lead to job losses at home?

This paper provides firm-level evidence on the labour demand effects of outward investments using a panel of multinationals (MNEs) based in Germany. Distinguishing the type of investments and the location of subsidiaries around the world between 1997 and 2008, our evidence shows that for both the manufacturing and services sector the expansion of employment abroad does not occur at the detriment of employment at home. The analysis is extended to see whether outward FDI causes average wage cuts for workers employed in the German parent firm. Our findings indicate no clear average wage effects due to outward FDI. Given that domestic MNEs are seen to play an important role in the growth potential for an economy, these findings are somewhat re-assuring from a policy point of view.

Foreign direct investment and economic development:an interactive relationship

With the increasing importance of Foreign Direct Investment (FDI), there have been substantial studies on this issue, both empirically and theoretically. However, most existing studies focus on either the impacts of FDI presence or the determinants of FDI inflows, ignoring the fact that inward FDI and economic development may simultaneously affect each other. This thesis sets out to examine the interactive effects between FDI and economic development. The whole thesis is composed of five chapters. Chapter One is an overall introduction to the thesis. Chapter Two presents a theoretical study and chapter Two and Three provide two empirical studies. Chapter Five concludes. Chapter Two presents a theoretical two-sector model that features the importance of human capital in attracting foreign investment. This model theoretically explains why FDI is more likely to occur among countries that are similar in terms of human capital and technology. On the other hand, MNCs must train local employees to work with firm-specific technology and hence improve the technological skills of local workers. In Chapter Two, an empirical model is constructed to detect whether the productivities of foreign and local firms impact each other. The model is tested on China’s data at the industry level. The results indicate that productivity growth of local and foreign firms are jointly determined. Evidence also suggests that the extent to which spillovers occur varies with difference technology levels of local firms. Chapter Four investigates the relationship between FDI and economic grown based on a panel of data for 84 countries over the period 1970-1999. Both equations of FDI inflow and GDP growth are examined. The results indicate that FDI not only directly promotes economic growth by itself, but also indirectly does so via its interaction terms. There is a strong positive interaction effect of FDI with human capital and a strong negative interaction effect of FDI with technology gap on economic growth in developing countries.

Governance in foreign policy-making in Germany and Poland and Polish-German relations:the role of non-state actors

This thesis examines the influence of non-state actors on Polish-German relations by considering foreign policy-making towards Poland in Germany and vice versa. The approach chosen for this thesis is interdisciplinary and takes into consideration literature from domestic politics (Area Studies), Foreign Policy Analysis and International Relations (IR). The thesis argues that IR, by purely looking into the quality of inter-state relations, too often treats these relations as a result of policies emanating from the relevant governments, without considering the policies’ background. Therefore, the thesis argues that it is necessary to engage with the domestic factors which might explain where foreign policies come from. It points out that non-state actors influence governments’ choices by supplying resources, and by cooperating or competing with the government on an issue at stake. In order to determine the degree of influence that non-state actors can have on foreign policymaking two variables are examined: the institutionalisation of the state relations in question; and the domestic structures of the relevant states. Specifically, the thesis examines the institutionalisation of Polish-German relations, and examines Germany’s and Poland’s domestic structures and their effect on the two states’ foreign policy-making in general. Thereafter, the thesis uses case studies in order to unravel the influence of non-state actors on specific foreign policies. Three case studies are examined in detail: (i) Poland’s EU accession negotiations with regard to the free movement of capital chapter of the acquis communautaire; (ii) Germany’s EU 2004 Eastern Enlargement negotiations with regard to the free movement of workers chapter of the acquis communautaire; and (iii) Germany’s decision to establsh a permanent exhibition in Berlin that will depict the expulsions of millions of Germans from the East following WWII.