Foreign Direct Investment Employment Effect Analysis: A Systematic Study

Foreign direct investment has been the subject of many studies due to its importance in providing financial resources for companies, governments, and technology transfer. Its effects and relationship with various economic factors, including employment, have been the focus of researches. However, there is still no coherent review study that takes into account other aspects of the issue and draw a general conclusion from the studies along with investigating the effect of foreign direct investment. This study is designed to fill this information gap. Among the searched articles, 329 published English papers about the effect of foreign direct investment on employment were studied and the results were presented according to dimensions such as the effect of short-term and long-term employment generation, the effect on skilled and simple labor force, etc. Finally, this general result was extracted that the maximum positive effect of Foreign Direct Investment (FDI) on employment is achieved when the FDI enters the host country in the form of Greenfield, and the training of human resources should be done by the FDI, especially the simple workforce, to match the level of technology imported by it. Policy making and legislation should support employment to maximize the country's absorption capacity and oblige the FDI to supply labor, raw materials, and required services from the host country.