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The interactions among foreign direct investment, economic growth, degree of openness and unemployment in Taiwan

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  • Shu Chen Chang

Abstract

The vector autoregression method of variance decomposition and impulse response function analysis are applied to analyse various relationships among foreign direct investment (FDI), economic growth, unemployment and degree of openness in Taiwan. The analysis results show that these five variables have a long-run equilibrium relationship; however, unemployment rate and FDI outflow have weak exogeneity. We also found that there exist three unidirectional causalities from FDI outflow to FDI inflow, from economic growth to degree of openness, and from economic growth to unemployment in short-run. Furthermore, the shocks of economic growth and degree of openness have positive effects on FDI inflow. On the contrary, the shocks in economic growth and FDI inflow have negative effects on unemployment rate.

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  • Shu Chen Chang, 2007. "The interactions among foreign direct investment, economic growth, degree of openness and unemployment in Taiwan," Applied Economics, Taylor & Francis Journals, vol. 39(13), pages 1647-1661.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:13:p:1647-1661
    DOI: 10.1080/00036840600675612
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    2. Ľubomír Darmo & Marcel Novák & Ján Lisý, 2020. "Vzťah medzi prílevom priamych zahraničných investícií a nezamestnanosťou v Slovenskej republike [Relationship Between Foreign Direct Investment Inflow and Unemployment in the Slovak Republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2020(4), pages 443-461.
    3. Cruz Mejía, Jose Vidal & Cruz-Rodríguez, Alexis, 2020. "Impacto de la inversión extranjera directa en el crecimiento económico, las exportaciones y el empleo de República Dominicana [Impact of foreign direct investment on economic growth, exports and em," MPRA Paper 100990, University Library of Munich, Germany.
    4. Baek , Jungho & Koo , Won W., 2009. "A Dynamic Approach to the FDI-Environment Nexus: The Case of China and India," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 13(2), pages 87-106, December.
    5. Senbeta, Sisay, 2008. "The nexus between FDI and Total Factor Productivity Growth in Sub Saharan Africa," MPRA Paper 31067, University Library of Munich, Germany.
    6. Keshab Bhattarai & Vipin Negi, 2020. "FDI and Economic Performance of Firms in India," Studies in Microeconomics, , vol. 8(1), pages 44-74, June.
    7. Jai Sheen Mah, 2010. "Foreign Direct Investment Inflows and Economic Growth: The Case of Korea," Review of Development Economics, Wiley Blackwell, vol. 14(4), pages 726-735, November.
    8. Jai S. Mah, 2011. "Globalization, Democratization and Economic Growth of East Asia," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 14(3), pages 91-105, September.
    9. Yilmaz Bayar & Mahmut Unsal Sasmaz, 2017. "Impact of Foreign Direct Investments on Unemployment in Emerging Market Economies: A Co-integration Analysis," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 10(3), pages 90-96, September.
    10. Mohd IRSHAD & Syed Hasan QAYED, 2022. "Casual nexus between economic growth, FDI and employment: An inquiry into BRICS and ASEAN," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(631), S), pages 107-124, Summer.

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