SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

Abstract: Outward investment is a way of maximizing the rents on the accumulated knowledge and skill of a country´s firms, or preserving them as long as possible when the country itself has lost its comparative advantage in their industries, and the industries, or parts of them must relocate. This paper examines the internationalization of Swedish firms and investigates the type of operations they move abroad. We find that Swedish MNCs, in contrast to U.S. multinationals, expand their more advanced activities abroad and keep the low wage operations at home. Presumably this is because Sweden has lost its comparative advantage in highly advanced production. We conclude that the home country effects of capital movements in the form of foreign direct investment depend very much on the macro-economic conditions in the investing country.

Keywords: Internationalization; Growth; Sweden

JEL-codes: O52

18 pages, April 14, 2000

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Published as

Magnus Blomström, (2000), 'Internationalization and Growth: Evidence from Sweden', Swedish Economic Policy Review, vol 7 (1), pages 185-201

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