Those Were the Days? Greenfield FDI, Jobs and Inclusion in Emerging Markets

By Zsoka Koczan, Philipp Paetzold and Nikola Vujic

We exploit an extensive database on more than 32,000 greenfield projects over 2003-2020 to examine how the composition of greenfield FDI inflows into the EBRD regions has changed over time, and what this implies for employment generation, inequality and spatial disparities. Our results suggest that while foreign investments created many jobs in the regions, projects have become less labour intensive over time. This occurred despite the increasing role of services, as labour intensity fell within many sectors. The share of projects in skill-intensive sectors has in turn increased as countries move up value chains. The rising share of service-sector jobs, concentrated in (capital) cities, also resulted in increasing geographic clustering over time. While FDI inflows have supported countries’ structural transformation, these changes will affect the distribution of incomes and may increase inequality.