Flat Packed Supply Chains : How Tariffs Shape the FDI Behaviorof Swedish MNCs

Sammanfattning

This thesis examines the relationship between host-country tariff rates and Swedish foreigndirect investment (FDI) from 1996 to 2021. Specifically, it uses Dunning’s OLI framework andinstitutional theory. Two hypotheses investigate whether higher tariffs are associated with ahigher number of Swedish multinational corporations (MNCs) subsidiaries and employees. Theanalysis utilizes panel data from 13 countries across multiple industries to assess the impact ofapplied most-favored-nation (MFN) tariffs on the number of Swedish subsidiaries andemployees. The study integrates data from Growth Analysis, the World Bank, CEPII, GTD,and UNCTAD TRAINS, employing fixed-effects panel regressions at both the country andindustry levels. Special emphasis is placed on the manufacturing sector with the highest tariffexposure. The findings indicate that Swedish MNCs do not respond uniformly to tariffs.Rather, their investment behavior is shaped by market characteristics, institutional settings, andindustry-specific conditions. These results contribute to the literature on trade policy andmultinational investment by offering a Swedish perspective on the interaction between tariffsand outward FDI.