The Impact of Foreign Direct Investment on Unemployment in Mena Region
Abstract
This paper examines the impact of foreign direct investment on unemployment in the MENA (Middle East and North Africa) region from 2011 to 2021. To achieve this, the study employed fixed effect and random effect estimators. The findings reveal that FDI, GDP growth, and population growth have negative coefficients and a significant impact on unemployment, whereas government expenditures and exports have negative coefficients but no significant impact on unemployment. This suggests that FDI, GDP growth and population growth reduce unemployment in the MENA region. Since the countries in this region have experienced high concentrations of unemployment, the government should focus on implementing policies that develop the skills and training of the people to prevent mismatches and encourage the private sector to create new jobs. In addition, the government should develop policies that facilitate the access and operation of FDI investors, as this will further assist in lessening unemployment in the MENA region.
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