Capital

• Explain

  • growth of FDI accelerated after the end of the Second World War 
  • divergence in growth tends between FDI and trade suggests that the primary mechanism of interconnectedness within the global economy has shifted from trade to FDI 
  • FDI inflow is related to low- or high-end work, influencing the types of employment and wages in the economy
• example

  • eg. Around 60% to 70% o the jobs created by the FDI attracted in Singapore in 2019 was for professionals managers, executives and technicians
  • eg. Indonesia received FDI largely related to low-productivity sectors, such as wholesale and retail trade, restaurants and hotels, and not higher-end jobs, but firms offered, on average, 39% higher level of wages for their workers from 1990 to 2009 in Indonesia
• link

  there is uneven development between developed countries and less developed countries. DCs can benefit from the creation of high-paying jobs due to most of their highly-skilled workers, allowing them to reap the economic benefits of the jobs. However, though FDI can create jobs for less developed countries, the amount of economic growth is limited as the jobs created are not as high-paying as compared to DCs, due to the level of skill required. Therefore, LDCs will not be able to reap that many economic benefits