Do FDI inflows reduces unemployment among youth: evidence from India

Furqan Ali (), Rehan Ali () and Mairaj Jahan ()
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Furqan Ali: Ministry of Commerce & Industry, Government of India, Department of Commerce
Rehan Ali: Noida Institute of Engineering & Technology - NIET
Mairaj Jahan: Aligarh Muslim University, Department of Geography

SN Business & Economics, 2025, vol. 5, issue 12, 1-16

Abstract: Abstract This study investigates the impact of net foreign direct investment (FDI) inflows on youth unemployment in India during the period 1990–2019. The study employs GDP, inflation, and population as control variables, while net FDI inflows serve as the main independent variable. For empirical analysis, the ARDL-bounds test for co-integration, fully modified least squares (FMOLS), and canonical co-integration regression (CCR) models are applied. The findings indicate that FDI has an insignificant impact on youth unemployment in India. Based on these results, the paper suggests that policies should be designed to channel FDI into labour-absorbing sectors in order to reduce unemployment.

Keywords: ARDL; FDI; Unemployment; FMOLS; J6; J68; G3 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00980-y

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