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The Relationship between Foreign Direct Investment and Employment in Jordan
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Journal Article
The Relationship between Foreign Direct Investment and Employment in Jordan
2007
Overview
This present paper intends to empirically investigate the relationship between real foreign direct investment (FDI) and employment level for Jordan over the period 1971-2003. The purpose of this paper is to answer the question whether or not the inward foreign direct investment boosts employment level, and hence, reduces unemployment in Jordan? The paper utilizes the labor demand function to estimate the impact of foreign direct investment inflow along with income variable expected to influence employment level. The empirical results show that the included time series are integrated of order one, I(1) and cointegrated, and hence, the OLS estimation provides a spurious relationship. Based on these results, the Vector Error-correction Model (VECM) is a suitable model to estimate such relationship. The results of the impulse response functions and variance decomposition reveal that LRFDI and LRGDP exhibit a positive and significant impact on employment level, and hence, there is a direct positive relationship.
Publisher
جامعة إربد الأهلية
Subject
