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Foreign direct investment and employment in manufacturing and services sectors Fresh empirical evidence from Singapore

Foreign direct investment and employment in manufacturing and services sectors Fresh empirical... Purpose – This paper aims to examine both the cointegrating and causal relationships among inward FDI and the host country's employment in manufacturing and services sectors. Design/methodology/approach – This paper applies autoregressive distributed lag (ARDL) framework to test the cointegration and causality patterns using Singapore as a case. Findings – Apart from the presence of a unique long‐run relationship, the findings also show evidence of long‐run causality, running from employment in manufacturing and services to FDI inflows, and from FDI inflows and services employment to manufacturing employment. Furthermore, there is evidence of short‐run causality showing strong FDI‐employment and employment linkages, predominantly from the manufacturing to services. Research limitations/implications – One likely area of future research is to extend this paper by using disaggregated data, e.g. FDI inflows by sector (manufacturing and services), and employment by the respective sectors. Practical implications – Manufacturing and services have been regarded as the “twin engines” of growth for the Singapore economy. As the economy is moving up the value chain from downstream to upstream activities, a significant proportion of foreign direct investment (FDI) has been attracted to the manufacturing and services sectors. The present study provides useful policy implications towards promoting foreign investment in emerging areas of and manpower development in both sectors of the economy. Originality/value – This paper explores the possible interactions between FDI inflows and employment in manufacturing and services sectors as well as the employment linkages between manufacturing and services in Singapore. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Studies Emerald Publishing

Foreign direct investment and employment in manufacturing and services sectors Fresh empirical evidence from Singapore

Journal of Economic Studies , Volume 38 (3): 18 – Aug 2, 2011

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
0144-3585
DOI
10.1108/01443581111152427
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to examine both the cointegrating and causal relationships among inward FDI and the host country's employment in manufacturing and services sectors. Design/methodology/approach – This paper applies autoregressive distributed lag (ARDL) framework to test the cointegration and causality patterns using Singapore as a case. Findings – Apart from the presence of a unique long‐run relationship, the findings also show evidence of long‐run causality, running from employment in manufacturing and services to FDI inflows, and from FDI inflows and services employment to manufacturing employment. Furthermore, there is evidence of short‐run causality showing strong FDI‐employment and employment linkages, predominantly from the manufacturing to services. Research limitations/implications – One likely area of future research is to extend this paper by using disaggregated data, e.g. FDI inflows by sector (manufacturing and services), and employment by the respective sectors. Practical implications – Manufacturing and services have been regarded as the “twin engines” of growth for the Singapore economy. As the economy is moving up the value chain from downstream to upstream activities, a significant proportion of foreign direct investment (FDI) has been attracted to the manufacturing and services sectors. The present study provides useful policy implications towards promoting foreign investment in emerging areas of and manpower development in both sectors of the economy. Originality/value – This paper explores the possible interactions between FDI inflows and employment in manufacturing and services sectors as well as the employment linkages between manufacturing and services in Singapore.

Journal

Journal of Economic StudiesEmerald Publishing

Published: Aug 2, 2011

Keywords: Causality; Foreign direct investment; Employment; Singapore

References