Do foreign direct investments and bank credits affect employment in Uzbekistan?
Purpose – The paper investigates the relationship between credit to the economy, foreign direct investment (FDI) and the unemployment rate in Uzbekistan using macroeconomic time series over 2004–2019. Design/methodology/approach – The study estimates the relationship by applying a vector autoregress...
| Main Author: | |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Emerald Publishing
2021-11-01
|
| Series: | Journal of Economics and Development |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JED-06-2021-0082/full/pdf?title=do-foreign-direct-investments-and-bank-credits-affect-employment-in-uzbekistan |
| Summary: | Purpose – The paper investigates the relationship between credit to the economy, foreign direct investment (FDI) and the unemployment rate in Uzbekistan using macroeconomic time series over 2004–2019. Design/methodology/approach – The study estimates the relationship by applying a vector autoregression model, which is considered a “workhorse” model for policy analysis to capture dynamic relationships in economic time series. Findings – The results suggest both growth in credit to the economy and FDI Granger cause a change in the unemployment rate. The authors found 1% increase in bank credits to the economy growth decreases the unemployment rate by 0.096 pp. over eight years. On the contrary, 1% positive shock to FDI growth increases the unemployment rate by 0.0036% in the context of Uzbekistan. Practical implications – Uzbekistan should improve FDI absorptive capacity, particularly human capital and financial market development, through growth-enhancing structural reforms in the financial sector to stimulate economic growth and employment. The attracted FDI funds should focus on productive and economic sectors with high labor-absorptive capacity, such as financial and professional services, healthcare and biomedicine, creative industries and media, software sector. Originality/value – The study contributes to the empirical literature on employment effects of FDIs and credit to the economy of Uzbekistan. |
|---|---|
| ISSN: | 1859-0020 2632-5330 |