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Abstract

This paper deals with the role of the labor market in moderating the growth-effect of foreign direct investment (FDI) in developing countries. FDI has developed rapidly and become the main source of economic growth in developing countries. The purpose of this paper is to examine the role of labor market flexibility in mediating the impact of FDI on economic growth in developing countries. Panel threshold regression analysis proposed by Hansen (1999) is employed to assess the hypothesis of the study. Findings/Originality: The results provide the empirical finding of the role labor market in moderating the growth effect of FDI in developed and developing countries and fill this gap by assessing the role of labor market flexibility as an absorptive capacity in FDI-growth link in developing countries.

Keywords

Labour market flexibility growth-effect foreign direct investment threshold

Article Details

Author Biography

Nurnaddia Nordin, Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, Malaysia.

Department of Bussiness

 

How to Cite
Nordin, N., Nordin, N., Mawar, M. Y., & Zainudin, N. (2019). Growth effect of foreign direct investment: The role of labor market flexibility. Economic Journal of Emerging Markets, 11(1), 19–31. https://doi.org/10.20885/ejem.vol11.iss1.art3
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