MNCs in Central, Southern and Central Europe and the former Soviet Union: investment decisions and the regulation of employment

Abstract

This article explores the relationship between the regulation of employment and the decisions of multinational corporations (MNCs) to invest in Central, Southern and Central Europe and the former Soviet Union. Building on La Porta et al.'s work on legal origin, and its assumptions as to the incompatibility of owner and worker rights, the World Bank's Doing Business reports held that countries with stronger protection for worker rights represented poor destinations for investors. However, is it the case that investors are really deterred by employee rights? Our study investigates actual trends in foreign direct investment (FDI) through an analysis of UNCTAD World Investment Reports. We find that the level of individual and collective rights and social security legislation is not significantly associated with FDI.