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

Mihaela Simionescu and Mirel Daniel Simionescu ()
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Mirel Daniel Simionescu: Romanian Academy

No 18, Working papers Globalization - Economic, Social and Moral Implications, April 2017 from Research Association for Interdisciplinary Studies

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.

Keywords: unemployment rate; FDI; vector error correction model; cointegration (search for similar items in EconPapers)
JEL-codes: C51 C53 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

Published in Conference proceedings Globalization - Economic, Social and Moral Implications, April 2017, pages 185-194

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Persistent link: https://EconPapers.repec.org/RePEc:smo:wpaper:18

DOI: 10.5281/zenodo.581785

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