Foreign capital inflows and employment : evidence from South Asian countries

This study is conducted to enlighten the first-line issue of Foreign Capital Inflows (FCI) and employment in South Asian countries such as Bangladesh, India, Pakistan, and Sri Lanka. These countries are inclined to have heavy FCI, since realize the deficiency of capital as root cause of their macroeconomic problems. The study reveals that FCI are evident in their escalation towards South Asian countries however, are less prompt in the evacuation of depressed state of employment. The study was to analyze secondary data for two periods i.e. 1972 to 2014 and 1980 to 2014. Autoregressive distributed lag, impulse response and variance decomposition, fully modified ordinary least square, seemingly unrelated regression, and Granger causality analyses were performed to validate and measure the effects of FCI onto the level of employment. The analyses of autoregressive distributed lag reveal assorted outcomes of each category of FCI at either of the countryside whereas analytics of fully modified ordinary
least square divulge worker remittances as the only form of FCI that ascertain positive relationship with employed labor force of South Asian countries. The results of impulse response and variance decomposition also illustrate different impacts of each of the component of FCI whereby Granger causality analyses confirm the causality between employed labor force and the components of FCI. At large, seemingly unrelated regression results suggest that the combined effects of FCI are significant and positive while South Asian countries are segregated. The study concludes to be as substantial for the governments and policy makers of South Asian countries to have different consideration among FCI. The implementation of pragmatic policy can lead towards much more of the progressive fallouts of such vital FCI on raising employment in such countries