FOREIGN DIRECT INVESTMENT AND EMPLOYMENT IN MANUFACTURING AND SERVICES SECTORS: FRESH EMPIRICAL EVIDENCE FROM SINGAPORE

Koi Wong and Tuck Cheong Tang ()

No 15/08, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: Manufacturing and services have been regarded as the ???twin engines' of growth for Singapore economy. As the economy is moving up the value chain from downstream to upstream activities, a significant proportion of FDI (foreign direct investment) has been attracted to the manufacturing and services sectors. This paper examines the causal relationships between inward FDI and the host country's employment in these two sectors using tri-variate VAR (vector autoregressive) framework. The main findings show evidence of unidirectional causality, running from employment in manufacturing and services to FDI inflows. Furthermore, there is evidence showing strong employment linkages, predominantly from the manufacturing to services. The present study provides useful policy implications towards promoting foreign investment in emerging areas of and manpower development in both sectors of the economy.

Keywords: Causality; foreign direct investment; employment; Singapore. (search for similar items in EconPapers)
JEL-codes: E24 F21 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2008-06-03
New Economics Papers: this item is included in nep-mac and nep-sea
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