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The Impact of Foreign Direct Investment on Employment Opportunities: Panel Data Analysis: Empirical Evidence from Pakistan, India and China

Author

Listed:
  • Syed Zia Abbas Rizvi

    (Institute of Business Management (IoBM), Karachi)

  • Muhammad Nishat

    (Department of Finance and Economics, Institute of Business Administration (IBA), Karachi)

Abstract

Over the past two decades, the continent of Asia received a large amount of FDI from developed regions. Additionally, in the Asia, India and China received a major chunk of foreign direct investment and FDI flows to Pakistan also increased significantly. Many studies show that the inflow of FDI plays a significant role in generating employment in host countries. The objective of this study is to undertake an empirical study on creation of employment opportunities by FDI during 1985–2008 in the Asian region. In this regard, we have taken the sample of three countries i.e. Pakistan, India and China from the same region. The Im-Pesaran-Shin (IPS) test of unit root is applied to find out the order of integration. The long run relationship is investigated through the Pedroni (1999) test of panel cointegration. At last, the Seemingly Unrelated Regression (SUR) method is used for estimation of the impact of FDI inflows on employment levels in three countries. Implications for FDI policy are spelt out in the light of these empirical results.

Suggested Citation

  • Syed Zia Abbas Rizvi & Muhammad Nishat, 2009. "The Impact of Foreign Direct Investment on Employment Opportunities: Panel Data Analysis: Empirical Evidence from Pakistan, India and China," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(4), pages 841-851.
    • Handle: RePEc:pid:journl:v:48:y:2009:i:4:p:841-851
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    Citations

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    Cited by:

    1. Golding, Khabran & Masih, Mansur, 2018. "Does foreign direct investment lead or lag employment ? an ARDL approach," MPRA Paper 109300, University Library of Munich, Germany.
    2. Yilmaz Bayar & Mahmut Unsal Sasmaz, 2017. "Impact of Foreign Direct Investments on Unemployment in Emerging Market Economies: A Co-integration Analysis," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 10(3), pages 90-96, September.
    3. Ramesh Chandra Das & Kamal Ray, 2022. "Linkages Between Employment and Net FDI Inflow: Insights from Individual as Well as Panel Data for Emerging South Asian Labour Market," Global Business Review, International Management Institute, vol. 23(3), pages 785-803, June.
    4. Anowor Oluchukwu F.* & Uwakwe Queendaline Chinyere & Chikwendu Nneka Francisca, 2019. "How Investment Does Affect Unemployment in a Developing Economy," Sumerianz Journal of Economics and Finance, Sumerianz Publication, vol. 2(7), pages 82-88, 07-2019.
    5. Kazi Mohammed Kamal Uddin & Munem Ahmad Chowdhury, 2020. "Impact of FDI on Employment Level in Bangladesh: A VECM Approach," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 8(1), pages 30-37.
    6. Munazah NAZEER* & Uzma TABASSUM** & Shaista ALAM***, 2017. "Banking And Telecommunication Influencing Migration In Major Cities Of Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 27(1), pages 101-120.

    More about this item

    Keywords

    FDI; Employment; Panel Data;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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