¹Fataki Donatien Alexandre,²Faray Makonga Fabrice

^1,2university of kindu, Lwama

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ABSTRACT

Using an error correction model, the ultimate objective of this paper was to investigate the influences exerted by foreign direct investment as well as those of other variables to which the theoretical literature gives some credit on the employment rate in DR Congo. The paper concludes that there is no or negligible relationship between foreign investment and unemployment during the period under review, regardless of the period of analysis. More concretely, the coefficient associated with FDI is positive in the dynamic relationship, but negative in the static relationship. In both cases, this coefficient is statistically not different from 0. It goes without saying that these investments contribute to job creation in the long term, but at a very marginal rate. In the short run, there is a substitution of FDI for domestic investment and thus an increase in the unemployment rate. Public capital expenditure and the accelerator effect, on the other hand, do not play much of a role in increasing the volume of employment in DR Congo. Moreover, the Phillips relationship is sufficiently robust in both the short and long run.

KEYWORDS:

FDI, unemployment, error correction model

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VOlUME 01 ISSUE 06 DECEMBER 2022