Impact of FDI Inflow on Average Wage and Employment in Serbia

Abstract

Research question: This research comes to examine the impact of FDI inflow on average wage and on employment in Serbia in the period 2005-2017. Motivation: FDI tendentiously increases the economic growth rates, taking into consideration the fact that developed economies benefit from FDI because their local institutions are more productive, while developing countries benefit from “pieces“ of FDI, i.e., dissemination of technology and rarely evoke some relevant progress in economic growth. Despite the growing research in the FDI field, the scientific literature on average wage and employment in relation to FDI Inflow in Serbia is limited, which is the motivation to conduct this research. Idea: Therefore, the aim of this research is to estimate the relationship between FDI Inflow and average wage and employment. Data: The data are obtained from the official sites of the National Bank of Serbia and from the Statistical Office of Serbia. Tools: The methodology used is the multiple Linear Regression Model, applying the IBM SPSS software, in order to identify the impact of FDI Inflow on average wage and on employment using time lags. Findings: The results prove the absence of significant impact of FDI inflow on average wage and on employment within the country. The highest positive impact of FDI inflow appears to be in the year the inflow occurs for average wage, and in the second year of FDI inflow performance for employment. Contribution: This paper contributes to the awareness of low impact of FDI inflow on average wage and on employment in Serbia. Moreover, this research covers the gap in the literature in the field of FDI inflow in relation to average wage and employment within the country

FDI inflow effects on Western Balkan area's labour markets

“…As for the impact of FDI inflow on employment, Jude & Silaghi (2016) would provide an effective comparison with this research if the authors had used FDI inflow instead of FDI stock, because both the analyses claim the positive long-term effect on employment. The findings of this paper partially confirm the findings of Domazet (2016) as well, while disagreeing with Peric (2019), presumably because of the larger sample used in this research.…”

“…According to them, FDI is responsible for the increase in wage inequality, as well, mostly due to the workers' skill levels. Whilst Sabic et al (2012), Zdravkovic & Martinovic (2016), Grahovac & Softic (2017), and Peric (2019) found that there is no significant impact of FDI inflow on employment, Stanisic (2008), and Jude & Silaghi (2016) claim that FDI inflow has a positive impact on employment growth. Similarly, Domazet (2016) stresses that FDI inflow represents only a partial contribution to employment rate growth.…”

What can be expected in credit-risk management from NPL in the western Balkans region in the future?

“…The time aspect of the research of banking and macroeconomic indicators in the paper will cover the period 2010-2019 (at the quarterly level). The scientific goal of the research is to show whether and to what extent the state of banking and external components affects the performance of the BS in the WB, characterized by increased competition, business diversification and liberalization of capital movements [26] [27]. The research starts from the initial hypothesis (H1) which reads: "The trend of NPLs can be forecasted by creating predictive models that accept macroeconomic and BS performance indicators as components."…”

The political regime as a determinant of inward foreign direct investment

“…To this context, the resurgence of foreign investors' interest was a matter of high importance for the government. Indeed in Bank International Trade Portal, 2019a;Perić, 2019).…”

“…According to the location assessment tool, "fDi Benchmark," Serbia is one of the cheapest locations, especially for manufacturing (Shehadi, 2019). Perić, 2019). The business environment is highly bureaucratic, dominated by corruption and political interference, poor market reputation and low functioning of the rule of law.…”