Foreign direct investment, salaries and wages: empirical evidence from Palestine and Jordan
Abstract
Purpose
The purpose of this paper is to compare salaries, wages and foreign direct investment (FDI) while focusing on Palestine and Jordan. The world development indicators (WDI) time series data, which spans the years 2000–2020, was used in this investigation.
Design/methodology/approach
The study used time-series data from 2000 to 2020, which was collected from the (WDI). This research's methodology is driven by the variables and data it uses, and the design is predicated on the fact that we gathered secondary data in addition to the national characteristics of Jordan and Palestine. The statistical approach of econometrics is used to construct linear techniques like regression models and null hypothesis testing. Econometrics is an additional method for predicting future trends in the economy.
Findings
The results demonstrate that FDI has a statistically significant and favourable effect on salaries and wages in Palestine and Jordan. The statistical impact of unemployment on wages and salaries is small, but it harms Palestine and Jordan. GDP per capita has a statistically significant effect on salaries and wages, although it does so in Jordan adversely and in Palestine positively. In Palestine, the labour force has a statistically substantial and favourable influence on wages and salaries; in Jordan, however, this impact is not as great. FDI boosts employment prospects when business owners, entrepreneurs and other stakeholders establish new ventures overseas.
Practical implications
The findings of this study have some policy implications. Investors must open new businesses abroad, and FDI increases possibilities and creates new employment. As a consequence, residents may earn more money and have more purchasing power, which will support the growth of the targeted economies in Jordan and Palestine. By enhancing the investment climate, the governments of Jordan and Palestine should encourage the flow of international direct investment. Low-technology companies and construction projects are more susceptible to the direct implications of FDI. To maximize the policy's effectiveness, both governments ought to devise specific measures to attract FDI to key economic sectors.
Originality/value
The study provides insight into how FDI enhances business opportunities when business owners, entrepreneurs and other stakeholders create new ventures abroad and locally within the two countries. This study contributes to the literature as it is considered the first study to address the impact of the relationship of FDI with wages and salaries in the Palestinian and Jordanian contexts. This study is also considered one of the very few studies that conducted empirical research from 2000 to 2020 to estimate the importance and impact of the relationship between FDI and wages or salaries.
Keywords
Acknowledgements
The authors express their appreciation and thanks to the Emerald Publishing Group, and they extend special thanks to the “EuroMed Journal of Business”, which will receive the paper and help to publish it, and great thanks and appreciation go to the journal's reviewers and its editorial board for their valuable comments and suggestions, which helped improve the quality of the paper and brought it to the level required for publication. A special appreciation to Palestine Technical University-Kadoorie (PTUK) and Amman Arab University (AAU) for supporting this research.
Citation
Al-Khazaleh, S., Badwan, N., Qubbaj, I., Qasem, S. and Sleimi, M. (2025), "Foreign direct investment, salaries and wages: empirical evidence from Palestine and Jordan", EuroMed Journal of Business, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/EMJB-02-2024-0032
Publisher
:Emerald Publishing Limited
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