Comments by Vu Quoc Huy, on The Impact of Globalization on Establishment-Level Employment Dynamics in Japan

Abstract

Vu Quoc Huy: The impact of outward foreign direct investment (OFDI) on a hostcountry’s employment has been an important and policy-relevant question for years. With rapidly expanding global production networks, this issue becomes even more important. At the same time, the causal impact of offshoring on domestic employment is rather complicated because of its nature, a firm’s organization, and any offshoring endogenous decision. For example, Liu and Lu (2011) provide a good summary of possible effects of OFDI on the home-country’s employment through substitution and complementary effects. There is also the win–win type of employment effect when outward investments can raise the demand and wages for skilled labor in both the parent and host-country. Other authors (Kovak, Oldenski, and Sly 2014) used a more sophiscated model and estimation procedure to show that offshoring has a positive aggregate impact on the home-country’s employment but this impact varies substantially across sectors and firms.