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Foreign Direct Investments and Employment. Structural Analysis

Author

Listed:
  • Dorin JULA

    () (Institute for Economic Forecasting, Romanian Academy and Ecological University of Bucharest, Financial Management Faculty.)

  • Nicolae-Marius JULA

    () ("Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences.)

Abstract

We analyze the impact induced by Foreign Direct Investments on changing the sectoral structure of employment. By developing a general methodological framework, we show that, for the dynamics of the structure analysis, the appropriate model is a panel data with time specific fixed effects and with cross-section specific effects, weighted by the growth rate of total employment. To analyze the change in structures, the appropriate model is, likewise, a panel data, without time specific (fixed or random) effects, but with cross-section specific ones, weighted by total employment. We find that for Agriculture, forestry and fishery, Manufacturing and Accommodation and food services, the growth of FDI was associated with a decrease in industry share in total employment, both at global level, as well as regarding the private and public employment structures. This means that, for the industries concerned, the FDI effect on productivity improvement was superior to the effect induced on employment growth. For Mining, Electricity, Natural gas and water, Information technology and communications, Financial intermediation and insurance, Professional, scientific, technical and administrative activities and support services the effect is positive for the private sector and negative for the public one. For the remaining industries (Construction and real estate transactions, Trade, Transportation) the effects of FDI was rather positive than otherwise. Consequently, for those industries, the FDI effect on employment growth exceeds that on productivity.

Suggested Citation

  • Dorin JULA & Nicolae-Marius JULA, 2017. "Foreign Direct Investments and Employment. Structural Analysis," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 29-44, June.
  • Handle: RePEc:rjr:romjef:v::y:2017:i:2:p:29-44
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    References listed on IDEAS

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    1. Calcedonia Enache & Fernando Merino, 2017. "Determinants of Foreign Direct Investment in Romania: a Quantitative Approach," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(44), pages 275-275, February.
    2. Maria Cipollina & Giorgia Giovannetti & Filomena Pietrovito & Alberto F. Pozzolo, 2012. "FDI and Growth: What Cross-country Industry Data Say," The World Economy, Wiley Blackwell, vol. 35(11), pages 1599-1629, November.
    3. Metaxas, Theodore & Kechagia, Polyxeni, 2016. "Literature review of 100 empirical studies of Foreign Direct Investment: 1950-2015," MPRA Paper 71414, University Library of Munich, Germany.
    4. Pelinescu, Elena & Radulescu, Magdalena, 2009. "The Impact of Foreign Direct Investment on the Economic Growth and Countries’ Export Potential," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 153-169, December.
    5. Miao Wang, 2009. "Manufacturing FDI and economic growth: evidence from Asian economies," Applied Economics, Taylor & Francis Journals, vol. 41(8), pages 991-1002.
    6. Albu, Lucian Liviu, 2008. "Trends in Structural Changes and Convergence in EU," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(1), pages 91-101, March.
    7. Ciuiu, Daniel, 2013. "Qualitative variables and their reduction possibility. Application to time series models," MPRA Paper 59284, University Library of Munich, Germany, revised Aug 2013.
    8. Dobrescu, Emilian, 2011. "Sectoral Structure and Economic Growth," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 5-36, September.
    9. Jula, Dorin & Jula, Nicolae Marius, 2013. "Economic Growth and Structural Changes in Regional EmploymenT," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 52-69, June.
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    1. repec:ntu:ntcmss:vol5-iss1-17-36 is not listed on IDEAS
    2. repec:eub:ecoecr:v:1:y:2017:i:1:p:3-20 is not listed on IDEAS

    More about this item

    Keywords

    Foreign Direct Investment; industry structure of employment; panel data models;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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