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JSPES, Vol. 39, No. 3 (Fall 2014)
pp. 269–289

Foreign Direct Investments, Economic Growth, and Employment: A Global Perspective

Bassam A. Albassam

Institute of Public Administration, Riyadh

While foreign investments have been sought by many countries, there is no consensus regarding the impact of foreign direct investments (FDIs) on the economy of the host countries. Efforts to attract foreign investments through the adoption of new regulations and economic openness, among other government actions, have translated into record highs in international trade and across-theboard merchandise in 2012. The current study explores the impact of FDI inflows on economic growth and employment globally during the period 1999-2012. The results are in agreement with most theoretical studies, showing that FDI has a positive influence on economic growth. The study also concludes that FDI contributes to governments’ efforts to reduce or at least control unemployment rates. That being said, it is important to recognize the differences among economies in benefiting from the presence of foreign investors in the host country’s market. Studying specific regions or countries is a good way to reach a better understanding of the impact of FDI on economic development, since different countries have different economic and cultural structures that may influence the relationship between FDI and economic development.