FDI and unemployment, a growth perspective

North–South foreign direct investment (FDI) is frequently viewed as a process in which jobs relocate from the North to South. I build growth model with two asymmetric trading economies, where firms innovate and South Northern invest take advantage of lower wages. Contrary expectation, find that FDI costs increase unemployment both There are effects on unemployment, positive one contributes turnover parallel innovation. The indirect effect appears through innovation growth: more means higher innovation, this intensifies firm increases rates countries even further. solve analytically without trade imitation products For version offer numerical solution also look at welfare relation. In addition FDI, explore how intellectual property (IP) rights protection affects welfare. Both steady state stricter IP protection.