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Impact of FDI on Employment Level in Bangladesh: A VECM Approach

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  • Kazi Mohammed Kamal Uddin
  • Munem Ahmad Chowdhury

Abstract

This study is designed to investigate the role of Foreign Direct Investment (FDI) in overall job creation in Bangladesh where annual time series data is used spanning from 1991 to 2018. The role of gross domestic products (GDP) and trade openness on employment level are also addressed. Johansen-Juselius cointegration and Vector error correction model are performed to check long run relationship and short run dynamics among the variables. The findings show that there exists co-integrating relations among the variables. Both FDI and GDP have significant positive effect on employment but trade openness possess the negative impact on employment in the long run. But FDI is negatively related with employment in the short run. This paper suggests to concentrate on making efficient policies to attract investors in green field investment which means investing for the establishment of new firms to create job opportunities in a large scale and to give the opportunity and logistic support to the native producers to produce more import substituted goods for reducing import dependence tendency.

Suggested Citation

  • 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.
    • Handle: RePEc:oap:ijaefa:v:8:y:2020:i:1:p:30-37:id:325
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    Cited by:

    1. Dani Rahman Hakim & Eeng Ahman & Kusnendi Kusnendi, 2023. "The effect of FDI on the host countries' employment: A meta-regression analysis," Russian Journal of Economics, ARPHA Platform, vol. 9(2), pages 158-182, July.

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