The effect of FDI on low and high-skilled employment and wages in Mexico: a study for the manufacture and service sectors

Saucedo, Eduardo; Ozuna, Teófilo; Zamora, Héctor

doi:10.1186/s12651-020-00273-x

Cited by 26 publications

(23 citation statements)

References 36 publications

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“…This can increase the wages of workers in the manufacturing sector. The results of this study are consistent with the findings of the study by Gazaniol & Catherine (2015), Girma et al (2016) and Saucedo et al (2020). Besides, years of schooling also showed a significant and positive relationship to wages in the manufacturing sector.…”

Section: Ardl Model Estimationsupporting

confidence: 92%

“…This will create employment opportunities for local workers and increase the country's economic growth and development. However, its overall beneficial effects on labour markets in these country suggest that rather than restricting FDI, governments should target increasing the supply of skilled labour (Saucedo et al, 2020).…”

Section: Discussionmentioning

confidence: 99%

“…FDI and wage inequality have a nonlinear connection (Zhang et al, 2021). According to a study by Saucedo et al (2020), a rise in FDI inflows into the manufacturing sector has a favourable effect on both low-and high-skilled employment. In the case of wages, it was discovered that FDI inflows by the manufacturing sector enhanced low-skilled wages somewhat while having no statistical effect on high-skilled wages.…”

Section: Literature Reviewmentioning

confidence: 99%

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The Effect of Foreign Direct Investment on Wage in Malaysian Manufacturing Sector: New Evidence using ARDL

2022

MAR

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Foreign direct investment (FDI) is essential to each country because it can increase economic growth. However, political and economic instability can affect the FDI inflow into a country. This study investigated the effect of FDI on wages in the Malaysian manufacturing sector for the period 1985-2018 by using the Autoregressive Distributed Lag (ARDL) method. The unit root test result showed that all the variables were stationary at first difference. The results obtained showed significant positive relationships between FDI and wage in the long and short run. Besides, education and skilled labour also showed a significant and positive relationship with wages in the manufacturing sector in the short run. Therefore, this study suggests that the policy makers have to stimulate a new policy to attract more investors to invest in Malaysia, especially in the manufacturing sector, as it has a positive effect on wages and increases employment in the host country. Other than that, the FDI inflow can also bring technology and human capital spillover.

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Section: Ardl Model Estimationsupporting

confidence: 92%

Section: Discussionmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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The Effect of Foreign Direct Investment on Wage in Malaysian Manufacturing Sector: New Evidence using ARDL

2022

MAR

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“…Based on our observation, we can claim that domestic wage rate does not determine FDI in Bangladesh. Conversely, many studies unveiled that FDI can influence the wage rate among the host nations (Pandya 2010;Saucedo et al 2020), and also FDI can enhance wage inequality (Te Velde and Morrissey 2004). The wage inequality is an effect of the differences of skill level of the domestic labors where highly skilled labors are paid handsomely by the MNCs.…”

Section: Analysis Of Var Results and Granger Causality Testmentioning

confidence: 99%

Causality analysis of the determinants of FDI in Bangladesh: fresh evidence from VAR, VECM and Granger causality approach

Morshed

Hossain

2022

SN Bus Econ

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We tested the causality between FDI and its determinants in Bangladesh in the presence of structural break harnessing Vector Autoregression (VAR) model and Granger causality test. Regressors such as GDP growth rate, inflation, interest, corporate tax, exchange and wage rate, and trade openness (TO) have been used. VAR model finds that interest, tax, wage, and exchange rate do not affect inward FDI. However, the inflation rate and TO significantly impact the inward FDI in Bangladesh. The Granger causality test reveals a bidirectional causality in the FDIinflation and FDI-TO nexus, whereas other explanatory variables do not cause the FDI granger. Variance decomposition (VDC) and impulse response function (IRF) assessment approve strong, moderate, and poor or no explanatory power of TO, inflation, and other explanatory variables, respectively. Regarding FDI-inflation bidirectional causality, we observed both natural (inflation truly causes FDI) and fake causality (FDI does not necessarily cause inflation). Therefore, when inflation causes FDI, then Bangladeshi Taka (BDT) becomes strong against USD, which increases import and reduces export (import > export). Due to the negative trade balance, this is true for Bangladesh. However, if FDI causes inflation, it will depreciate BDT; consequently, the export will surpass the total import, which is not the case in Bangladesh. Therefore, inflation causes FDI in Bangladesh, and this punch line ends the ongoing debate in the FDI-inflation-exchange rate nexus in Bangladesh. Finally, we recommend decreasing the lending interest rates to encourage further investment, adopting tax holidays, developing a skilled and semi-skilled workforce to harness the advantage of lower wage rates, and being more open to facilitating FDI-led development.

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“…Later, Lee and Park [38] used firm-level data from 20 Korean industries to demonstrate that inbound greenfield FDI boosts industry employment. Similarly, Saucedo et al [39] analyzed quarterly panel data from 32 Mexican states from 2005 to 2018, indicating that FDI had a favorable influence on manufacturing employment but no noticeable impact on service sector employment.…”

Section: Nexus Between Fdi and Employmentmentioning

confidence: 99%

Globalization and employment nexus: Moderating role of human capital

Mushtaq

Ahmed²,

Fahlevi³

et al. 2022

PLoS ONE

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While globalization has increased the movement and interconnection of goods, technology, and information, it has also affected employment. Many studies have analyzed the impact of globalization on employment creation resulting in positive and negative findings. However, an area of literature still needs to be explored studying how human capital affects the impact of globalization on employment creation. The current study contributes to the literature by analyzing the moderating role of human capital in the globalization-employment nexus in 26 Asian countries. For this, annual panel data were collected from 1996 to 2019. The estimations have been done using 12 model specifications, 6 for direct and 6 for indirect impact association between globalization and employment through the human capital channel. The study uses generalized least square (GLS) method and generalized method of moments (GMM) for empirical analysis. The static and dynamic analysis shows that globalization’s direct and indirect impact on employment through the channel of human capital is positive. Industrial value added and economic growth leads to more employment creation, whereas population growth dampens it. Human capital plays a positive role in getting the advantage of globalization in terms of employment creation. This study confirms the literature recommendations of promoting human capital development to achieve globalization’s benefits for more employment creation.

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The effect of FDI on low and high-skilled employment and wages in Mexico: a study for the manufacture and service sectors

Cited by 26 publications

References 36 publications

The Effect of Foreign Direct Investment on Wage in Malaysian Manufacturing Sector: New Evidence using ARDL

The Effect of Foreign Direct Investment on Wage in Malaysian Manufacturing Sector: New Evidence using ARDL

Causality analysis of the determinants of FDI in Bangladesh: fresh evidence from VAR, VECM and Granger causality approach

Globalization and employment nexus: Moderating role of human capital

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