The impact of foreign direct investment on employment: An implementation on developing countries

Foreign direct investments that emerged together with financial globalization recently have got a considerable share in the incoming capital flows in developing countries. The idea that foreign direct investments could play a crucial role has become widespread through the advantages they have offered. In this manner, many developing countries have been approaching foreign direct investment as a factor that could increase employment.This study has been conducted to examine whether the impact of foreign direct investment on employment could meet the expectations or not. In the study, for 27 developing countries, the Granger causality, the Dynamic panel causality and Pedroni cointegration tests have been used setting the 1991-2008 periods as a basis. Acording to causality test results, in the short run, a casual relationship from foreign direct investments to employment has been observed. Furthermore, Pedroni cointegration test results reveal a long-term relationship between foreign direct investment and employment.Key Words: Foreign Direct Investments, Employment, Developing Countries, Panel Data Analysis.