IMPACT OF THE FDI ON UNEMPLOYMENT RATE IN COUNTRIES OF WEST BALKAN

Abstract

Modern economy is facing many challenges, in global terms.One of them is the high unemployment rate in many countries.That is a crucial problem, which jeopardises economic, social and political stability.Many factors have an impact to it, and some of them are globalisation, fast development of high technology, global economic crisis and expressed instability of financial markets.In addition, the relation of offer and demand is highly expressed in favour of the offer, the excess of capital at the global level is evident and seeks opportunities of investment as profitable as possible.The situation where the interests of big capital opposed to the costs is becoming more pronounced, which is reflected in the increasing growth of FDI in countries with lower operating costs.On the other hand, underdeveloped and developing countries spread the range of measures for attracting foreign direct investment (FDI), since it is one of the ways for increasing employment rate.This matter has already been the subject of numerous studies, particularly during the period of transition of countries in CEE.However, in modern frameworks, it is actualized again, with different circumstances and motives.In this article global unemployment rates, flows of FDI, their correlation in the Western Balkan countries and comparative analysis with chosen countries are presented.The period observed is 2000-2014.The paper is devoted to the influence of foreign direct investment on labour market.The interdependencies between FDI and unemployment were econometrical.The analysis showed that since 2009, there is a significant reduction of net investments, which is more obvious in the case of FDI due to a lower domestic and external demand as a result of the global economic crisis what led to a decreasing number of employees and rising unemployment.Results, also, show the absence of a positive impact of FDI on employment, which was present in most CEE countries during the transition period, as shown in numerous empirical studies.

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