Foreign direct investments and trade unions in the post-communist countries (original) (raw)

In this article I analyze the means through which the characteristics of the unions affected the short and long terms patterns of FDI inflows in the post-communist countries. I investigate the effects of three variables describing this structure: Effective Number of Unuion Confederation (ENUCfs), Union density rate, net union membership as proportion of wage and salary earners (UD), Membership concentration at central or confederal level (Herfinal index at central or peak level) (Hcf), and evaluate how they would have a different effect on the FDI inflows, considering various control variables. The Linear regression, correlated panels corrected standard errors (PCSEs) show that the short-term and long term-effects of these variables is different and only partially fits the theoretical expectations drawn from the literature. One of the core debates within the literature focusing on identifying and explaining the causal factors that determine variation in the economic and welfare regimes across developed countries regards the trends that lead to a continuous decrease of unionization rates across these countries in the last three decades. Within this literature, I focus on one of the most important external factors that directly affected the economic evolution and policies of many countries, the Foreign Direct Investments (FDI). In this article I investigate the relationship between the characteristics of trade unions in the 10 European Union New Member States and the FDI inflows employing one of the most powerful multi-causal statistic technique for modeling panel-data: OLS Regression using Panel Corrected Standard Errors. In the first section I review the most relevant literature in the field, in the second section I present the most important Hypothesis, while in the third section I analyze the data using several OLS Regression PCSE models. 2 Recent research Given the high importance of FDI in the post-communist economic transformation, it implicitly represented an important factor that affected union's strength and capacity to advance their own agenda. FDI played such an important role in the 10 EU NMS transition towards a market economy, and afterwards in the process of EU accession, both because it offered the investment needed to reintegrate some sectors of economy in the international chains of production, but also given its ability to provide a fast technological transfer. Kornai argues that the speed and scale of post-communist transformation in the East European Countries represents a process unique in the history of the world given the simultaneous presence of some features: the simultaneous transformation in the political and economic sphere, all in the direction of emulating the Western world, the non-violent character of the transformation, the peaceful circumstance of the transformation and the fast speed at which this transformation occurred. [1] One of the important factors that generated this unparalleled change

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