FDI Impact on Gross Profit, Wages and Labour Productivity : A Study of Swedish Firms in the Industrial Goods and Services Sector

by Blick, Andreas; Mårtenson, David

This thesis analyses what effects foreign direct investments (FDI) has on a firm’s gross profit, wages and labour productivity. Focus is on the Swedish industrial goods and service sector which has shown on a rapid growth of offshore production. We use a theoretical framework with FDI and productivity theories. As a result of cost efficient alternatives to domestic production, a firm’s productivity should fall in the case of increased foreign production. Although, the increase in gross profit should rule out the negative affect that a decrease in productivity cause.There is a positive relationship between offshore production and gross profits, and expanded foreign production leads to a decreased wage rate. However, increased foreign employment showed a boost the labour productivity, which is wrong from a theoretical point of view.