The Effect of Inward and Outward FDI on the Unemployment Rate of Developing Countries

Purpose - This study empirically analyzes the relationship between inward and outward FDI and unemployment. Specifically, we examine the effects of foreign direct investment (FDI) inflows and outf lows on the unemployment rate using panel data from 68 developing countries from 2012 to 2021. Design/Methodology - Using a dataset of 68 developing countries from 2012 to 2021 which was analyzed by the system GMM method. Findings - The results show that inward FDI is positively related to the unemployment rate, while outward FDI is negatively related to it. We further examined the effect of inward and outward FDI on the unemployment rate by education level. By dividing the unemployment rate by the education level, the relationship between FDI and unemployment was closely analyzed. Originality/value - This finding of this study highlights the significance of considering the educational level of workers when analyzing the relationship between both inward and outward FDI and unemployment rate in developing countries