The Impact of Foreign Direct Investments and Economic Growth on Employment: The Case of Palestine

Today, foreign direct investments are a powerful economic growth and job creation tool. The study's data, which aims to analyze the effects of FDI and economic growth on employment in the Palestinian context, covers the period between 1995-2022 and consists of annual data. Time series cointegration analysis was preferred as the econometric analysis method. The stationarity of the variables was evaluated with ADF and PP unit root tests, and it was determined that they were non-stationary. As a result of the Johansen cointegration test, a long-run relationship between the variables was determined. According to the FMOLS, DOLS, and CCR estimation results, a statistically significant positive relationship was found between the EMP variable used as the dependent variable in the study and the FDI and lnGDP variables at a 5% confidence level. Finally, according to the Toda Yamamoto causality test results, a statistically significant unidirectional causality relationship was found between the FDI and lnGDP variables and the EMP variable at a 5% level. These results show that FDI in Palestine can create employment and that economic growth has a substantial impact on employment.