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Year 2013, Volume: 2 Issue: 3, 53 - 66, 01.09.2013

Mehmet Mucuk M. Tahir Demirsel

Abstract

References

  • Ajaga, E. and P. Nunnenkamp (2008), Inward FDI, Value Added and Employment in US States: A Panel Cointegration Approach, Kiel Working Papers, No. 1420, Kiel Institute for the World Economy, Kiel.
  • Aktar, I., and Ozturk, L. (2009). Can Unemployment be Cured by Economic Growth and Foreign Direct Investment in TURKEY?. International Research Journal of Finance and Economics, 27, pp. 203-211.
  • Bakkalcı, A. C. and N. Argın (2013), Internalization of Foreign Trade in the Context of Labor Market Induced by Foreign Investment, Journal of Labour Relations, Vol. 4, Number 1, pp. 71-97. Baltagi, B. H. (2005). Econometric Analysis of Panel Data. John Wiley & Sons Ltd, West SussexEngland.
  • Bodart, V., and Candelon,B., and Carpantier, J. (2011). Real Exchanges Rates in Commodity Producing Countries: A Reappraisal. Discussion Papers Center for Operations Research and Econometrics, Belgium.
  • Craigwell, R. (2006). Foreign Direct Investment and Employment in the English and DutchSpeaking Caribbean. Working Papers, Tripartite Caribbean Employment Forum 2006, Barbados.
  • Engle, R. F., and Granger, C.W.J. (1987). Cointegration and Error Correction Representation: Estimation and Testing. Econometrica, 55(2), pp. 251-276.
  • Göçer, İ., M. Mercan and O. Peker (2013), Export, Foreign Direct Investment and Unemployment: The Case of Turkey, Business and Economics Research Journal, Vol. 4 Number 1, pp. 103-120.
  • Habib, M. D. and S. Sarwar (2013), Impact of Foreign Direct Investment on Employment Level In Pakistan: A Time Series Analysis, Journal of Law, Policy and Globalization, Vol. 10, pp. 46-55.
  • Hadri, K. (2000). Testing for Stationarity in Heterogeneous Panel Data. Econometric Journal, 3, pp. 148-161.
  • Hisarcıklılar, M., and Gültekin-Karakaş D., and Aşıcı A.A. (2009). Can FDI be a Panacea for Unemployment?: The Turkish Case. Workshop on Labour Markets, Tade and FDI, Istanbul Technical University, Istanbul.
  • Ho, Yuan-Hong, and Huang, Chiung-Ju (2009). Tax-Spend, Spend-Tax, or Fiscal Synchronization: A Panel Analysis of the Chinese Provincial Real Data, Journal of Economics and Management, 5(2), pp. 257-272.
  • Hurlin, C., and Mignon V. (2006). Second generation panel unit root tests. THEMA-CNRS, University of Paris X, Mimeo.
  • Im, K.S., and Pesaran, M.H., and Shin Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115, pp. 53–74.
  • Jayaraman T.K., and Singh B. (2007). Foreign Direct Investment and Employment Creation in Pacific Island Countries: An Empirical Study of Fiji. Asia-Pacific Research and Training Network on Trade Working Paper Series, No. 35.
  • Jenkins, R. (2006). Globalization, FDI and Employment in Viet Nam. Transnational Corporations, 15 (1), pp. 115-142.
  • Kao C., and Chiang M. (2000). On the Estimation and Inference of a Cointegrated Regression, in Panel Data Nonstationary Panels, Panel Cointegration and Dynamic Panels. In: B. Baltagi, Editor, Advances in Econometrics15, Elsevier, Amsterdam, New York and Tokyo, pp. 179-222.
  • Karlsson, S., N. Lundin, F. Sjöholm and P. He (2009), Foreign Firms and Chinese Employment, World Economy, Vol. 32, Issue 1, pp. 178-201.
  • Kwiatkowski D., and Phillips P., and Schmidt P., and Shin Y. (1992). Testing the Null Hypothesis of Stationary against the Alternative of a Unit Root: How Sure are we that Economic Time Series have a Unit Root?. Journal of Econometrics, 54, pp. 159-178.
  • Larsson, R., and J. Lyhagen (1999). Likelihood-Based Inference in Multivariate Panel Cointegration Models. Working Paper Series in Economics and Finance, No.331, Stockholm School of Economics.
  • Levin, A., and Lin C.F., and Chu J. (2002). Unit root in panel data: Asymptotic and finite-sample Properties. Journal of Econometrics, 108(1), pp. 1-24.
  • Lipsey, R. E., F. Sjöholm and J. Sun (2010), Foreign Ownership and Employment Growth in Indonesian Manufacturing, NBER Working Paper, No. 15936.
  • Maeso-Fernandez, F., and Osbat, C., and Schnatz B. (2004). Towards the Estimation Equilibrium Exchange Rates for Cee Acceding Countries: Methodological Issues and a Panel Cointegration Perspective. European Central Bank Working Paper, No. 353.
  • Mark N.C., and Sul D. (2002). Cointegration Vector Estimation by Panel DOLS and Long- run Money Demand. NBER Technical Working Papers 0287, National Bureau of Economic Research, Inc.
  • Massoud, N. (2008). Assessing the Employment Effect of FDI Inflows to Egypt: Does the Mode of Entry Matter?. International Conference on “The Unemployment Crisis in the Arab Countries”, Cairo- Egypt.
  • Pedroni, P. (1997). Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis, New Results, Indiana University Working Papers on Economics.
  • Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin of Economics and Statistics, 61, pp. 653-670.
  • Pedroni, P. (2000). Fully Modified OLS for Heterogeneous Cointegrated Panels. Advances in Econometrics, 15, pp. 93–130.
  • Pedroni, Peter (2004). Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests With An Application to the PPP Hypothesis. Econometric Theory, 20, pp. 5976
  • Phillips P., and Moon H. (2000). Nonstationary Panel Data Analysis: an Overview of some Recent Developments. Econometric Reviews, 19(3), pp. 263-286.
  • Saray, M. O. (2011), The Relationship of Foreign Direct Investments and Employment: Turkey Case, Maliye Dergisi, Number 161, pp. 381-403.
  • Waldkirch, A., P. Nunnenkamp and J. A. Bremont (2009), Employment Effects of FDI in Mexico’s Non-Maquiladora Manufacturing, Journal of Development Studies, Vol. 45, No. 7, pp. 1165–1183. Yaylı, S. and M. K. Değer (2012), The Relationships Between Foreign Direct Investments and Employment: Dynamic Panel Data Causality Analysis on Developing Countries (1991-2008), Finans, Politik ve Ekonomik Yorumlar, 49 (568), pp. 43-51.
  • Zhu, Q.J., and Zhao D.T. (2008). Causality Relationship between Energy Consumption and Economic Growth: Based on Panel Data of Provinces in China. International Conference on Management Science and Engineering, California.

The Effect Of Foreign Direct Investments On Unemployment: Evidence From Panel Data For Seven Developing Countries

Year 2013, Volume: 2 Issue: 3, 53 - 66, 01.09.2013

Mehmet Mucuk M. Tahir Demirsel

Abstract

In this study, the relationship between foreign direct investment and unemployment are investigated for 7 developing countries, namely Argentina, Chile, Colombia, Philippines, Thailand, Turkey and Uruguay by using the panel data analysis. Panel unit root, panel cointegration and panel causality tests performed by using yearly data from 1981 to 2009 for all countries show that foreign direct investment and unemployment move together in the long run but although foreign direct investment increases unemployment in Turkey and Argentina, it reduces unemployment in Thailand. However, causality tests only depict that there is a relationship from foreign direct investment to unemployment in the long run.

Keywords

Foreign direct investments unemployment panel unit root panel cointegration panel causality.

References

  • Ajaga, E. and P. Nunnenkamp (2008), Inward FDI, Value Added and Employment in US States: A Panel Cointegration Approach, Kiel Working Papers, No. 1420, Kiel Institute for the World Economy, Kiel.
  • Aktar, I., and Ozturk, L. (2009). Can Unemployment be Cured by Economic Growth and Foreign Direct Investment in TURKEY?. International Research Journal of Finance and Economics, 27, pp. 203-211.
  • Bakkalcı, A. C. and N. Argın (2013), Internalization of Foreign Trade in the Context of Labor Market Induced by Foreign Investment, Journal of Labour Relations, Vol. 4, Number 1, pp. 71-97. Baltagi, B. H. (2005). Econometric Analysis of Panel Data. John Wiley & Sons Ltd, West SussexEngland.
  • Bodart, V., and Candelon,B., and Carpantier, J. (2011). Real Exchanges Rates in Commodity Producing Countries: A Reappraisal. Discussion Papers Center for Operations Research and Econometrics, Belgium.
  • Craigwell, R. (2006). Foreign Direct Investment and Employment in the English and DutchSpeaking Caribbean. Working Papers, Tripartite Caribbean Employment Forum 2006, Barbados.
  • Engle, R. F., and Granger, C.W.J. (1987). Cointegration and Error Correction Representation: Estimation and Testing. Econometrica, 55(2), pp. 251-276.
  • Göçer, İ., M. Mercan and O. Peker (2013), Export, Foreign Direct Investment and Unemployment: The Case of Turkey, Business and Economics Research Journal, Vol. 4 Number 1, pp. 103-120.
  • Habib, M. D. and S. Sarwar (2013), Impact of Foreign Direct Investment on Employment Level In Pakistan: A Time Series Analysis, Journal of Law, Policy and Globalization, Vol. 10, pp. 46-55.
  • Hadri, K. (2000). Testing for Stationarity in Heterogeneous Panel Data. Econometric Journal, 3, pp. 148-161.
  • Hisarcıklılar, M., and Gültekin-Karakaş D., and Aşıcı A.A. (2009). Can FDI be a Panacea for Unemployment?: The Turkish Case. Workshop on Labour Markets, Tade and FDI, Istanbul Technical University, Istanbul.
  • Ho, Yuan-Hong, and Huang, Chiung-Ju (2009). Tax-Spend, Spend-Tax, or Fiscal Synchronization: A Panel Analysis of the Chinese Provincial Real Data, Journal of Economics and Management, 5(2), pp. 257-272.
  • Hurlin, C., and Mignon V. (2006). Second generation panel unit root tests. THEMA-CNRS, University of Paris X, Mimeo.
  • Im, K.S., and Pesaran, M.H., and Shin Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115, pp. 53–74.
  • Jayaraman T.K., and Singh B. (2007). Foreign Direct Investment and Employment Creation in Pacific Island Countries: An Empirical Study of Fiji. Asia-Pacific Research and Training Network on Trade Working Paper Series, No. 35.
  • Jenkins, R. (2006). Globalization, FDI and Employment in Viet Nam. Transnational Corporations, 15 (1), pp. 115-142.
  • Kao C., and Chiang M. (2000). On the Estimation and Inference of a Cointegrated Regression, in Panel Data Nonstationary Panels, Panel Cointegration and Dynamic Panels. In: B. Baltagi, Editor, Advances in Econometrics15, Elsevier, Amsterdam, New York and Tokyo, pp. 179-222.
  • Karlsson, S., N. Lundin, F. Sjöholm and P. He (2009), Foreign Firms and Chinese Employment, World Economy, Vol. 32, Issue 1, pp. 178-201.
  • Kwiatkowski D., and Phillips P., and Schmidt P., and Shin Y. (1992). Testing the Null Hypothesis of Stationary against the Alternative of a Unit Root: How Sure are we that Economic Time Series have a Unit Root?. Journal of Econometrics, 54, pp. 159-178.
  • Larsson, R., and J. Lyhagen (1999). Likelihood-Based Inference in Multivariate Panel Cointegration Models. Working Paper Series in Economics and Finance, No.331, Stockholm School of Economics.
  • Levin, A., and Lin C.F., and Chu J. (2002). Unit root in panel data: Asymptotic and finite-sample Properties. Journal of Econometrics, 108(1), pp. 1-24.
  • Lipsey, R. E., F. Sjöholm and J. Sun (2010), Foreign Ownership and Employment Growth in Indonesian Manufacturing, NBER Working Paper, No. 15936.
  • Maeso-Fernandez, F., and Osbat, C., and Schnatz B. (2004). Towards the Estimation Equilibrium Exchange Rates for Cee Acceding Countries: Methodological Issues and a Panel Cointegration Perspective. European Central Bank Working Paper, No. 353.
  • Mark N.C., and Sul D. (2002). Cointegration Vector Estimation by Panel DOLS and Long- run Money Demand. NBER Technical Working Papers 0287, National Bureau of Economic Research, Inc.
  • Massoud, N. (2008). Assessing the Employment Effect of FDI Inflows to Egypt: Does the Mode of Entry Matter?. International Conference on “The Unemployment Crisis in the Arab Countries”, Cairo- Egypt.
  • Pedroni, P. (1997). Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis, New Results, Indiana University Working Papers on Economics.
  • Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin of Economics and Statistics, 61, pp. 653-670.
  • Pedroni, P. (2000). Fully Modified OLS for Heterogeneous Cointegrated Panels. Advances in Econometrics, 15, pp. 93–130.
  • Pedroni, Peter (2004). Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests With An Application to the PPP Hypothesis. Econometric Theory, 20, pp. 5976
  • Phillips P., and Moon H. (2000). Nonstationary Panel Data Analysis: an Overview of some Recent Developments. Econometric Reviews, 19(3), pp. 263-286.
  • Saray, M. O. (2011), The Relationship of Foreign Direct Investments and Employment: Turkey Case, Maliye Dergisi, Number 161, pp. 381-403.
  • Waldkirch, A., P. Nunnenkamp and J. A. Bremont (2009), Employment Effects of FDI in Mexico’s Non-Maquiladora Manufacturing, Journal of Development Studies, Vol. 45, No. 7, pp. 1165–1183. Yaylı, S. and M. K. Değer (2012), The Relationships Between Foreign Direct Investments and Employment: Dynamic Panel Data Causality Analysis on Developing Countries (1991-2008), Finans, Politik ve Ekonomik Yorumlar, 49 (568), pp. 43-51.
  • Zhu, Q.J., and Zhao D.T. (2008). Causality Relationship between Energy Consumption and Economic Growth: Based on Panel Data of Provinces in China. International Conference on Management Science and Engineering, California.
There are 32 citations in total.

Details

Journal Section Articles
Authors

Mehmet Mucuk This is me

M. Tahir Demirsel This is me

Publication Date September 1, 2013
Published in Issue Year 2013 Volume: 2 Issue: 3

Cite

APA Mucuk, M., & Demirsel, M. T. (2013). The Effect Of Foreign Direct Investments On Unemployment: Evidence From Panel Data For Seven Developing Countries. Journal of Business Economics and Finance, 2(3), 53-66.

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