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


  • Syed Zia Abbas Rizvi

    (Institute of Business Management (IoBM), Karachi)

  • Muhammad Nishat

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


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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    1. repec:tei:journl:v:10:y:2017:i:3:p:90-96 is not listed on IDEAS
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    More about this item


    FDI; Employment; Panel Data;

    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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