Title: Blueprinting the equilibrium relationships between inward FDI and employment in the Malaysian economic sectors: time series models approach

Authors: Hussain Ali Bekhet; Mohamed Ibrahim Mugableh

Addresses: Graduate Business School, Universiti Tenaga Nasional, 43000 Kajang-Selangor, Malaysia ' Graduate Business School, Universiti Tenaga Nasional, 43000 Kajang-Selangor, Malaysia

Abstract: Using annual time-series data for the (1972-2012) period, the present paper re-examines the multivariate inward FDI function for Malaysia, in particular, employment in economic sectors. It employs Pesaran, Shin, and Smith approach to analyse the co-integration and equilibrium relationships. The Granger causality test in levels is applied to determine the causality directions between inward FDI and employment in economic sectors. Results of bounds F-statistics suggest that employment in economic sectors is co-integrated with inward FDI. The results of the Granger causality test indicate a unidirectional causality, running from inward FDI to employment in the manufacturing sector, and from employment in the construction sector to inward FDI. These results have practical policy implications for decision makers in developing economies in terms of increasing FDI and employment levels in economic sectors.

Keywords: inward FDI; foreign direct investment; employment; economic sectors; stationarity; co-integration; equilibrium; Malaysia; time series modelling; Granger causality test; developing countries.

DOI: 10.1504/GBER.2016.075507

Global Business and Economics Review, 2016 Vol.18 No.2, pp.136 - 150

Available online: 30 Dec 2015 *

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