Premium
The Effect of the Liberalization of Investment Policies on Employment and Investment of Multinational Corporations in Africa
Author(s) -
Asiedu Elizabeth,
GyimahBrempong Kwabena
Publication year - 2008
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/j.1467-8268.2008.00176.x
Subject(s) - multinational corporation , liberalization , globalization , investment (military) , foreign direct investment , economics , international economics , poverty , economic liberalization , panel data , business , labour economics , market economy , economic growth , macroeconomics , political science , finance , politics , law , econometrics
: There has been a remarkable shift in the attitudes towards globalization. Specifically, the discussion among academics and policymakers has shifted from whether globalization should be encouraged to how countries can position themselves to benefit from globalization. This paper focuses on one aspect of globalization — the liberalization of investment policies — and analyzes its impact on employment and investments by multinational corporations in Africa. We use data for 33 countries over the period 1984–2003 and we employ a dynamic panel estimator for our analysis. There are two major findings. First, liberalization has a significant and positive effect on investment. Second, liberalization does not have a direct impact on multinational employment — the effect is indirect: liberalization stimulates multinational investments which in turn increases multinational employment. By increasing investment and employment from multinational firms, these liberalization programs contribute to poverty alleviation.