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Foreign direct investment and employment in manufacturing and services sectors

Author

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  • Koi Nyen Wong
  • Tuck Cheong Tang

Abstract

Purpose - This paper aims to examine both the cointegrating and causal relationships among inward FDI and the host country's employment in manufacturing and services sectors. Design/methodology/approach - This paper applies autoregressive distributed lag (ARDL) framework to test the cointegration and causality patterns using Singapore as a case. Findings - Apart from the presence of a unique long‐run relationship, the findings also show evidence of long‐run causality, running from employment in manufacturing and services to FDI inflows, and from FDI inflows and services employment to manufacturing employment. Furthermore, there is evidence of short‐run causality showing strong FDI‐employment and employment linkages, predominantly from the manufacturing to services. Research limitations/implications - One likely area of future research is to extend this paper by using disaggregated data, e.g. FDI inflows by sector (manufacturing and services), and employment by the respective sectors. Practical implications - Manufacturing and services have been regarded as the “twin engines” of growth for the Singapore economy. As the economy is moving up the value chain from downstream to upstream activities, a significant proportion of foreign direct investment (FDI) has been attracted to the manufacturing and services sectors. The present study provides useful policy implications towards promoting foreign investment in emerging areas of and manpower development in both sectors of the economy. Originality/value - This paper explores the possible interactions between FDI inflows and employment in manufacturing and services sectors as well as the employment linkages between manufacturing and services in Singapore.

Suggested Citation

  • Koi Nyen Wong & Tuck Cheong Tang, 2011. "Foreign direct investment and employment in manufacturing and services sectors," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 38(3), pages 313-330, August.
    • Handle: RePEc:eme:jespps:v:38:y:2011:i:3:p:313-330
    DOI: 10.1108/01443581111152427
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    Citations

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    Cited by:

    1. Dellis, Konstantinos & Sondermann, David & Vansteenkiste, Isabel, 2022. "Drivers of genuine FDI inflows in advanced economies," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 407-419.
    2. Dellis, Konstantinos & Sondermann, David & Vansteenkiste, Isabel, 2017. "Determinants of FDI inflows in advanced economies: Does the quality of economic structures matter?," Working Paper Series 2066, European Central Bank.
    3. Sondermann, David & Vansteenkiste, Isabel, 2019. "Did the euro change the nature of FDI flows among member states?," Working Paper Series 2275, European Central Bank.
    4. Chama CHIPETA & Daniel Francois MEYER, 2018. "Trade Openness, FDI and Exchange Rate Effects on Job Creation in South Africa's Tradable Sectors," Journal of Economics and Behavioral Studies, AMH International, vol. 10(4), pages 197-212.
    5. Amy Dict-Weng Kwan & Tuck-Cheong Tang, 2020. "We Bring You Capital and Job – Foreign Investment and Employment in Malaysia," Capital Markets Review, Malaysian Finance Association, vol. 28(1), pages 49-63.
    6. Polyxeni Kechagia & Theodore Metaxas, 2022. "FDI and Institutions in BRIC and CIVETS Countries: An Empirical Investigation," Economies, MDPI, vol. 10(4), pages 1-23, March.

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