Effect of Aggregate FDI and Sectoral FDI on the Unemployment Rate: Evidence from Türkiye

Authors : Emre GÖKÇELİ

Pages : 27-42

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Publication Date : 2023-06-30

Article Type : Review Paper

Abstract :The objective of this research is to investigate the effect of FDI inflows on the unemployment rate by employing the Vector Autoregression insert ignore into journalissuearticles values(VAR); method during the period of 1992-2020 in Türkiye. The findings reveal that FDI inflows have no significant effect on employment, which may be due to the varying impact of FDI on employment rates across different sectors. Given that the linkage of FDI with the rest of economy, particularly the labour market may exhibit varying effect across different sectors. To address this issue, this research endeavours to examine the impact of FDI on unemployment rates in Türkiye across various sectors. The results demonstrate that FDI in the manufacturing industry is associated with a reduction in the unemployment rate, whereas FDI in the primary and service sectors is not found to have a significant effect. Based on the results, the study offers implications and recommendations for future research.
Keywords : Türkiye, Foreign Direct Investment, Unemployment Rate, Vector Autoregression