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

Author

Listed:
  • 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.

Suggested Citation

  • Elizabeth Asiedu & Kwabena Gyimah-Brempong, 2007. "The Effect of the Liberalization of Investment Policies on Employment and Investment of Multinational Corporations in Africa," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200702, University of Kansas, Department of Economics.
  • Handle: RePEc:kan:wpaper:200702
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    File URL: http://www2.ku.edu/~kuwpaper/2007Papers/200702.pdf
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    Cited by:

    1. Elie NGONGAN, 2014. "Physical Infrastructures and Attractiveness of Private Capital in Sub-Saharan African (SSA) Countries," Journal of Economics Library, KSP Journals, vol. 1(1), pages 9-21, December.
    2. Gibson Hosea Munisi & Roy Mersland, 2016. "Ownership, Board Compensation and Company Performance in Sub-Saharan African Countries," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 15(2), pages 191-224, August.
    3. Ngongan, Elie, 2014. "Physical Infrastructures and Attractiveness of Private Capital in Sub-Saharan African (SSA) Countries," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 7-21.

    More about this item

    Keywords

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

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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