Effects of OFDI on Employment and Skill Upgrading in Its Home Economy

This research empirically examines the relationship between outward foreign direct investment （OFDI） and employment in its home economy. It is marked out from existing studies in the following three respects. First, instead of advanced economies, it focuses on the effect on employment in a newly industrialized economy. Second, it not only addresses the general issue of whether employment or production overseas complements or substitutes for employment in parent companies but also examines how OFDI contributes to skill upgrading in its origin economy, in addition to the quantitative effect. Third, this paper allows the results to vary between labour-intensive industries and technology-intensive industries in order to find the extent to which the home employment effect is moderated by industrial technology intensity. The results demonstrate that the location of investment and industry characteristics matter for explaining the effect of OFDI on home employment. Specifically, we find that while OFDI by Taiwan＇s multinationals in the Chinese mainland depresses employment in Taiwan in both labour- and technology-intensive industries, OFDI in other economies only produces a negative employment effect in technology-intensive sectors. An interesting finding of this study is the evidence of positive effects of OFDI on skill upgrading in Taiwan. This paper supports the argument that relocation of productivity overseas axes low-skilled workers at home. Moreover, OFDI in the Chinese mainland has a particular positive impact on skill upgrading in the home industry, lending support to the view that multinational enterprises （MNEs） outsource labour-intensive goods from their affiliates in low-income economies.

Factors Determining Health Expenditure in the Asian and the OECD Countries

It is widely recognized that developed countries have been spending more than developing countries on health care. Objective of the study is to examine determinants of health expenditure and what factors influence it. Fifteen Asian countries and 30 OECD countries were chosen to explore the difference of their health expenditure structures. Model of health expenditure per person was estimated to be dependent on market demand, market supply, and other exogenous factors. A model with country specific and time effects of health expenditure was used and estimated. The study found a negative but insignificant relationship between price and health expenditure and a positive and significant relationship between GDP and health expenditure. Urban population density as proxy of urbanization was found to induce the health expenditure in the OECD. Out-of-pocket payment was also found to induce health expenditure for both the Asian and the OECD countries. A net effect of improvement in the health status or a lower mortality rate and a higher life expectancy caused an increase in the health expenditure among the Asian countries studied but decreased health expenditure in the OECD countries. In terms of income elasticity, it was found to be smaller than one in both groups of the countries. Since the income has changed faster than the other factors, the net effect of changes of all factors over period of time will cause rising in health care expenditure. Finally, the model indicated that both the Asian and OECD countries will continue to have a rising health expenditure per person over a period of time.