The impact of foreign direct investment on the level of employment

Introduction

Foreign direct investment (FDI) is a significant driver of economic development, particularly in developing countries. It influences various economic factors, including employment levels. This synthesis examines the impact of FDI on employment, drawing insights from multiple research papers.

Key Insights

Positive Impact on Employment Creation:
- FDI has a statistically significant and positive impact on employment growth through job creation in host countries .
- In the Chinese electronics industry, FDI is associated with higher labor productivity, which can indirectly boost employment.
Negative Impact on Domestic Employment:
- Outward FDI can negatively impact the labor intensity of domestic production, especially in cases of vertical investment in less developed countries.
- FDI can reduce union employment and competitive wages if unions prioritize employment over wages.
Indirect Effects on Employment:
- The indirect effects of FDI on employment can outweigh the direct effects, particularly in sectors with low FDI that provide substantial inputs to other sectors.
- FDI can increase employment opportunities through direct and indirect effects, supported by various economic theories and models.
Sector-Specific and Regional Variations:
- The impact of FDI on employment varies by sector and region. For instance, horizontal and market-seeking investments in advanced countries tend to have a positive impact on employment.
- In developing economies, FDI in skilled-labor intensive sectors can lower relative wages, affecting employment dynamics.

Conclusion

The impact of FDI on employment is multifaceted, with both positive and negative effects. While FDI generally promotes job creation and higher labor productivity, it can also lead to reduced domestic employment in certain contexts. The overall effect of FDI on employment depends on various factors, including the type of investment, the sector, and the region. Effective regulation and policies can help maximize the positive impacts of FDI on employment.

The impact of foreign direct investment on the level of employment

Summary

Introduction

Key Insights

Conclusion

Sources and full results

The Impact of Foreign Direct Investment on Wages and Employment

Foreign direct investment reduces negotiated wages and union employment, but these effects are reduced when labor-management bargaining is firm-specific and unionization is industrywide.

Home country employment and foreign direct investment: evidence from the Italian case

Foreign direct investment negatively impacts domestic employment in less developed countries, while positively affects it in advanced countries.

The Employment Impact of Direct Foreign Investment

Direct foreign investment has a significant short-run employment impact, with indirect effects potentially outweighing direct effects by ten to one in low-DFI sectors that provide substantial inputs to other sectors.

Foreign direct investment and the relative wage in a developing economy

Foreign direct investment in skilled-labor intensive sectors in developing economies lowers the relative wage, while a discriminatory subsidy only to foreign firms may raise welfare.

The impact of foreign direct investment on labour productivity in the Chinese electronics industry

Foreign presence in the Chinese electronics industry is associated with higher labor productivity through the introduction of capital, technology, and management skills.

Economic analysis of the employment effect of Foreign Direct Investment

FDI increases employment chances through direct and indirect effects, and should be attracted through regulating domestic macro policies to boost employment levels.

Impact of Foreign Direct Investment on Employment Level In Pakistan: A Time Series Analysis

Foreign direct investment has a long-term positive impact on employment levels in Pakistan, as shown by a co-integration analysis of 1970-2011 data.

An Assessment of the Impact of Foreign Direct Investment on Employment: The Case of Ghana’s Economy

FDI significantly and positively impacts employment growth in Ghana's non-mining sector, with factors like wage structure, investment freedom, and subsectors playing key roles.

The Influence of Foreign Direct Investment to Our Country's Employment

Foreign direct investment positively influences China's employment by providing funds and technologies, promoting economic development, and reducing employment pressure and improving employment quality.

Impact of Foreign Direct Investment on Economic Growth

FDI positively impacts economic growth in developing countries by enhancing efficiency, technology development, infrastructure strengthening, and job creation opportunities.

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