The inter-relationship between foreign direct investments and unemployment: case study of China, India and Singapore
by Florida Veljanoska
International Journal of Business Performance Management (IJBPM), Vol. 23, No. 1/2, 2022

Abstract: This paper will empirically test the causality between FDI and unemployment. Hence, the main purpose of this empirical research is to test the hypothesis that the FDI inflows are directed towards the countries with high unemployment rate, and that FDI inflows lead to the reduction of the unemployment rate in the receipt country. The analysis will be done for China, India and Singapore, which are constantly ranked as the most attractive destinations for FDI inflows. The analysis covers the period 1991-2018. The Granger causality test was conducted in order to discover the causal relationship between the FDI inflows and unemployment. The results from the test have shown that in all three countries there is one-directional causality, and that unemployment Granger cause FDI, while FDI does not have significant influence on unemployment rate.

Online publication date: Thu, 09-Dec-2021

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