Multinational enterprises, employment and real wages in Malaysian manufacturing

Abstract

The structuralist assertion that MNEs involved in export-oriented production in developing countries suppress real wage growth leading to an unequal distribution of gains from the internationalisation of production is examined through a case study of Malaysia. When appropriately controlled for other determinants of inter-industry differences in wage growth, there is no empirical evidence to suggest that MNE presence in negatively related with real wage growth. The observed relatively slow growth of average real wages of workers in foreign-owned export industries can be explained in terms of the ongoing process of wage convergence among industries and the increased exposure of domestic manufacturing to world competition through greater export orientation. Show more