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The Connection between Foreign Direct Investment and Unemployment Rate in the United States

Author

Listed:
  • Mihaela Simionescu

    (Institute for Economic Forecasting of the Romanian Academy)

  • Mirel Daniel Simionescu

    (Romanian Academy)

Abstract

Considering that foreign direct investment (FDI) is the principal mechanism for economic globalization, this study analyzes the relationship between FDI and unemployment rate in the US. A vector error correction model was built for checking the long-run and the short-term relationship between FDI inflows and the absolute variation of unemployment rate in the current period compared to previous period. The quarterly data covered the period from 2000 to 2016. The empirical findings showed that only on long-run the changes in the US unemployment rate influenced the FDI. There was not any short-run relationship between FDI and variation in unemployment rate. The macroeconomic policies for attracting FDI in the US should take into account that the foreign investors are sensitive on long-term to the shocks in the unemployment rate.

Suggested Citation

  • Mihaela Simionescu & Mirel Daniel Simionescu, 2017. "The Connection between Foreign Direct Investment and Unemployment Rate in the United States," Working papers Globalization - Economic, Social and Moral Implications, April 2017 18, Research Association for Interdisciplinary Studies.
    • Handle: RePEc:smo:wpaper:18
    DOI: 10.5281/zenodo.581785
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    References listed on IDEAS

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    Cited by:

    1. Mehman Karimov & Anett Paradi-Dolgos & Rita Koroseczne Pavlin, 2020. "An Empirical Analysis of the Relationship between Foreign Direct Investment and Unemployment Rate: Evidence from Turkey," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 453-464.

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    More about this item

    Keywords

    unemployment rate; FDI; vector error correction model; cointegration;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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