This paper investigates the evolution of foreign subsidiaries in promoting
employment in their host regions. The implications for employment are considered
using a theoretical frameworks on how Multinational Corporations (MNCs) develop
their network of subsidiaries. The theoretical framework suggests that (when parent
companies are based in economies with similar levels of development as the host
economy) the development of subsidiaries should follow a time path beginning with
export enhancing investments that diversify into more complex operations. An
analysis is then made on how this would affect employment. The theoretical
framework is assessed using evidence from a survey of German subsidiaries in North
West England. The survey suggest that German MNCs may not be providing the
expected benefits that are sought from the large increase in Direct Foreign
Investment (DFI) flows that have followed from the integration programmes of the
European Union (EU). The results of the survey are reinforced by evidence from
other research work, which suggests that European MNCs are less likely than non-
European to create diversified networks of subsidiaries within the EU. Some policy
implications and a future research agenda are drawn from the results
