Foreign direct investment, salaries and wages: empirical evidence from Palestine and Jordan

PurposeThe 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/approachThe 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.FindingsThe 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 implicationsThe 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/valueThe 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.