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The Effect of the Liberalization of Investment Policies on Employment and Investment of Multinational Corporations in Africa

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Author Info

  • Elizabeth Asiedu

    (Department of Economics, The University of Kansas)

  • Kwabena Gyimah-Brempong

    (Department of Economics, University of South Florida)

Abstract

There has been a remarkable shift in the attitudes towards globalization. Specifically, the discussion among academics and policymakers has shifted from whether globalization should be encouraged to how countries can position themselves to benefit from globalization. This paper focuses on one aspect of globalization – the liberalization of investment policies – and analyzes its impact on employment and investments by multinational corporations in Africa. We use data for 33 countries over the period 1984-2003 and we employ a dynamic panel estimator for our analysis. There are two major findings. First, liberalization has a significant and positive effect on investment. Second, liberalization does not have a direct impact on multinational employment – the effect is indirect: liberalization stimulates multinational investments which in turn increases multinational employment. By increasing investment and employment from multinational firms, these liberalization programs contribute to poverty alleviation.

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Bibliographic Info

Paper provided by University of Kansas, Department of Economics in its series WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS with number 200702.

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Length: 20 pages
Date of creation: Jul 2007
Date of revision:
Handle: RePEc:kan:wpaper:200702

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Keywords: Africa; employment; foreign direct investment; U.S. multinationals.;

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