The Vacillations and Oscillations of Foreign Direct Investment, Debt, Unemployment and Economic Growth Nexus in Namibia


Academic Paper, 2020

49 Pages, Grade: Masters


Excerpt

Table of Contents

1. Introduction
1.1 Conundrum

2. Literature Review
2.1 FDI Theories
2.1.1 Knowledge Capital Model
2.1.2 Hymer FDI Theory
2.1.3 Eclectic Paradigm Theory
2.2 The Vacillations and Oscillations FDI, Unemployment, Debt- Economic Growth Nexus
2.3 Taxonomies of FDI
2.3.1 FDI in Natural Resources
2.3.2 FDI in Infrastructure
2.3.3 FDI in Non-extractive and Non-infrastructure Sectors
2.4 Vacillations and Oscillations on the determinants of Household Indebtedness in Namibia
2.4.1 Changes in household income
2.4.2 Changes in interest rates.
2.4.3 The household house prices.
2.4.4 Housing equity withdrawal
2.4.5 Excessive consumption
2.4.6 Unemployment

3. Main causes of unemployment
3.1 Types of unemployment
3.2 Namibia’s High government expenditure through bloated departments
3.3 Namibia’s High government debt
3.3.1 Vacillations advocating State Borrowing
3.3.2 Vacillations Against State Borrowing
3.4 The effect of unemployment on individuals, households and business
3.4.1 Economic growth and sovereign debt
3.4.2 Vacillations and Oscillation of the GDP growth rate in Namibia

4. Results
4.1 Chinese is the highest FDI in Africa
4.2 Net Direct Investments in Namibia

5. Portfolio Investments
5.1 Granger Causality
5.2 Policy Recommendations

6. References

Abstract

It is the purpose of this paper to unravel the oscillations and vacillations of foreign direct investment, debt, unemployment to economic growth nexus. People do not eat GDP people want food on the table. The nexus of good governance, unemployment, economic growth and FDI is essential. Good economic governance shows a positive effect on growth, attract FDI, reduces unemployment and attracts economic growth. Bad economic governance inclines to reduce economic growth, increases unemployment, reduces FDI, cause people to languish in debts and delays people in the investment process. A positive sign of corruption indicates that the higher the corruption, the lower the inward FDI. The researcher disagrees that corruption is suitable for foreign investors. The pendulum is tilted where investors prefer not to invest in countries with high corruption where there is a lack of enforcement laws.

Further, foreign investors have created an ecosystem where local small businesses cannot compete. More worrying is the state’s credit rating that has seen a consistent downgrade by major credit rating agencies, which now stands at sub-investment grade, or what is referred to as “junk status”.The main reasons quoted for this declivity was going to the dogs of Namibia’s financial robustness due to massive fiscal lopsidedness, an astronomic debt excess baggage and limited enterprise capacity to manage shocks and address long-term structural pecuniary rigidities. There has been a rift between the youth haves and have-nots in term of job allocation. The total household debt in Namibia is made up mostly of mortgages, car loans, student loans and credit card debt. The car loans, mortgages, credit cards and student loans make up most of 95% of Namibia household debt.

Statistics show that from 2009 to 2018, the net direct investments in Namibia were detrimental. In 2015 and 2016 the direct investments were at a low ebb having -16 00. In 2018- the direct investments not above 8000, while between 2009 to 2010, the direct investments were not less than 600. During the third quarter of 2017, the direct investment was 4000. Unemployment determinant has been identified as a hindrance to the repayment of student loans because when students graduate, there is no employment for them. When unproductive and less skilled graduates are sitting at home without jobs, they will be unable to pay back the loan. The promotion of Vocational Education, SMEs, and the establishment of polytechnic colleges offering vocational training and apprenticeship is long overdue in the country.

Key Words: Oscillation, Vacillation, foreign Direct Investment Debt, Economic Growth, Unemployment , Nexus

1. Introduction

After independence, the government authorities began to search for foreign capital in order to restore and maintain economic growth in the country (Dembo & Nyambe, 2016). The government officials implemented the Foreign Investment Act in 1990 and under this act Namibian Investment Centre (NIC), Export Processing Zone (EPZ) and open-door policy on Foreign Direct Investment (FDI) introduction. Consequently, the country started to accept external sources of finance, whereby FDI dominated all other sources of foreign capital investment.

In theory, FDI is aimed to sustain and promote long-term economic growth, even when the domestic country is experiencing financial crises (Lipsey, 2001). Further economic development results in stable financial markets and has a positive spill over on the stock market development. Empirically, FDI enables states to advance their technology, improve human capital investment, encourage economic productivity and competitiveness in the country (Ali, 2014). According to the Bank of Namibia (2006) and Haiyambo (2013), they revealed that more than 60 per cent of the leading FDI projects investment in the mining sectors are due to an abundant potential mineral that the country possesses such as diamonds, copper, gold, and others.

Good governance reckons as essential chauffeurs of both inward FDI, economic growth and creation of employment (Sherbourne , 2013). In current time, inward FDI in emerging Asia has upsurged mainly due to the liberalisation of investment policies and lowering capital costs. Corruption affects foreign investment by upsurging the cost of investment, leading to a lowering in profitability. A positive sign of corruption shows that the higher the corruption, the lower the inward FDI. They were suggesting that foreign investors construe corruption as an extra cost to doing business, rather construing it as an assisting hand. The researcher strongly disagrees that corruption is suitable for foreign investors. Negative effect teaches us that investors prefer not to invest in states with high corruption where there is lack of enforcement of laws.

Furthermore, author’s such as Adam and Anokye (2008), Claessens et al. (2001), Kalim and Shabas (2009) empirically researched on this topic and they showed that there exists a relationship between FDI, unemployment, economic growth, high debt and stock market growth. However, they fail to unravel the relationships between the four and the direction of causality. While, other economists such as Adarov and Tchaidze (2011), Mahembe (2014) failed to include how FDI can also be indirectly used as a tool to economic growth, through the investment of some of that capital in the stock markets. It, is, therefore, the desideratum of this discourse to explore the vacillations and oscillations of foreign direct investment, debt, unemployment and economic growth nexus.

1.1 Conundrum

The government of Namibia has done well in Meat industry and promotion of gender management in the Country. Youth unemployment has been a venerable challenge that impact countries such as Greece, Spain, Italy, Pakistan, South Africa, Namibia, Malaysia and others. However, most of the jobs created by FDI in the manufacturing sector do not impart skills that help the state after the investor has departed. Further, foreign investors have created an ecosystem where local small businesses cannot compete. (Kambonde & Ravinder, 2017). Some investors brought in workers from their home country to perform general tasks that could have generated employment for locals. In other cases, the locals who were employed were underpaid or mistreated. Such investors also repatriated profits to their home countries, leaving the host country as a source of cheap labour and free amenities. (Kambonde & Ravinder, 2017).

More worrying is the country’s credit rating that has seen a consistent downgrade by major credit rating agencies, which now stands at sub-investment grade, or what is referred to as “junk status” (Moody's Investor Services, 2017). The main reasons quoted for this declivity was going to the dogs of Namibia’s financial robustness due to massive fiscal lopsidedness, an astronomic debt excess baggage and limited enterprise capacity to manage shocks and address long-term structural pecuniary rigidities (Mukuddem-Petersen, Mah, Miruka, & Petersen, 2013).

A knee jerk reaction to the demur encountering the economy of Namibia due to the increase in state debt and high state expenditure (Adamu, Salihu, Musa, Abdullahi, & Bello, 2018). “Namibian state debt is worrying because its increasing rate causes grave implications”. These were the dispositions unpacked from the Namibian Finance Minister’s stamp of approval that the state debt has grown by over forty-five per cent in the last two years may cause economic strains in the state (Confidente, 2015)

Joblessness, poverty and inequality remain the fundamental socio-economic challenges facing Namibia. Unemployment of the youth has triggered drugs, and some of the people have increased the crime rate, through robbery and illegal means of gaining money. There is a rift between the youth haves and youth have nots because some haves were given jobs while have nots are also demanding for jobs. These vicissitudes and oscillations if not correctly managed, can be a timebomb. The vicissitudes of a skills mismatch are part of the unemployment in the economy. The structure of the economy has evolved in response to technological changes, demands of production and developments in the global economy, growing the need for higher-level skills. It is, therefore, the purpose of this rubric to unravel the oscillations and vacillations of foreign direct investment, debt, unemployment to Economic growth nexus.

2. Literature Review

2.1 FDI Theories

2.1.1 Knowledge Capital Model

Research by Pedro (2016) shows that the knowledge-capital model forecasts that vertical FDI is driven by variation in relative factor endowment between the source and host economies. Proffering that relative skill endowment should positively affect bilateral FDI. The expected positive correlation reflects the fact that unskilled –labour-abundant states will attract more FDI due to lower wages. Due to restricted data on skill endowment, vertical or efficiency-seeking FDI is proxied by the variation in wage costs between the source and host states. In the absence of information on labour costs, a body of empirical has also reckoned the difference in real GDP per capita between the source and host states as a proxy for vertical FDI. Across Africa, there is scarce empirical on the question of whether intra-African FDI is driven by efficiency-seeking considerations (Ali, 2017). These investments may have been facilitated by regional trade agreements which promote efficiency-seeking FDI, as well as the need to exploit economies of scale and scope in large markets. The trend analysis further suggests that some non-resource rich countries have attracted FDI in the clothing and textile industry from Asia that, mainly employ low cost (Pedro, 2016) unskilled local workforce. Given these facts, this study hypothesises that efficiency-seeking considerations drive FDI from the different groups of economies into domestic host market

2.1.2 Hymer FDI Theory

Research by Anderson( 2017) unpack Hymer, on his assessment of what causes foreign investment, the researcher makes a juxtaposition between direct investment and portfolio investment and how portfolio investment can elucidate direct investment through the interest rate theory. Hymer’s perception is that the interest rate theory of portfolio investment was not sufficient to elucidate direct investment as it did not unpack the control of assets. According to Hymer (1976), a direct investment which is the mobility of capital involves both ownership and control. Hymer offered two main rationales for direct investment: one who has to do with the careful use of assets for the safety of portfolio and the other main reason which is global operations, i.e. the avidity to control production by eradicating competition and have access to specific skills, capital or technology (Anderson, 2017).

2.1.3 Eclectic Paradigm Theory

The eclectic paradigm or also known as to as OLI frame of reference mooted by professor of international business John Harry Dunning. The eclectic paradigm furnishes MNEs do a frame of reference for analysing the determinants of foreign direct investment and tasks. According to Cantwell (2017), different production of MNEs elucidated through three sub-paradigms or constructs. The first one focus on the competitive edge of those corporates wanting to be involved in FDI. Holding other determinants constant, the higher their competitive advantages over another corporate in the host state, the more likely they will be involved in the foreign production. Ownership advantages embrace ownership of patents, natural resources, trademarks, technology, massive economies of scale (Cantwell, 2016).

2.2 The Vacillations and Oscillations FDI, Unemployment, Debt- Economic Growth Nexus

Under the Neo-classical growth, FDI reckons to be an uncontaminated determinant input, and the long -term impacts of FDI are neutral. Discourses incumbent upon the neo-classical growth are awash, which contends that the impact of FDI on the host state’s economic growth is merely in the short term and leaves the long run not altered. These fundis are of the perception that long-run growth can take place only when the quantity (population growth) and quality of resources (technological progression) in the economy are enhanced that is called exogenous growth. In juxtaposition under the endogenous model, FDI is a vehicle for transfer of technological knowledge and know-how from the investing state to host state. One predicament is evaluating the impact of FDI on economic growth is endogeneity which emanates due to the nexus of FDI and economic growth. FDI has a positive impact on the host economy, leading to market expansion.

Economic growth is a function of investment and other determinants, while investments can encapsulate domestic and foreign, foreign direct investment is adding new investment funds to a host country attracting economic growth (Claramount, 2017). The oscillation and vacillation of inward FDI on economic growth has been a robust borne of contention. The vacillation and oscillation on the nexus of inward FDI and economic growth persist. However, most countries employ and deploy tax incentives policies to attract FDI. Promote employment opportunities, develop rural areas and progression of specific industries. The nexus of good governance, unemployment, economic growth and FDI is essential. Good economic governance shows a positive effect on growth, attract FDI, reduces unemployment and attracts economic growth. Bad economic governance inclines to reduce economic growth, increases unemployment, reduces FDI, cause people to languish in debts and delays people in the investment process. As government effectiveness is a magnet to FDI, it becomes essential that the quality of policy formulation and enforcement are in tandem with foreign investors. Policymakers should improve legislation to attract foreign investors and foreign capital. An FDI policy should negates corruption and implement governance quality and attract investment rather than constraining both local and foreign investors.

2.3 Taxonomies of FDI

2.3.1 FDI in Natural Resources

Even when the natural resources are generating income, there is a danger of currency exchange rates being negatively affected. Overvalued currencies are usually as a result of policies put in place to protect the local currency, instead of allowing market forces to determine the exchange rates (Shatz & Tarr, 2016). There have been cases where for personal gain, individual government officials have corruptly authorised foreign direct investment without following due process. A case in point is in Nigeria, where foreign firms have invested in the oil industry by giving incentives to corrupt officials (Moran, 2016). Countries like Chile are examples of nations that have effectively managed the use of income from natural resources, thereby benefiting many of their citizens (Moran, 2016).

2.3.2 FDI in Infrastructure

The main challenge facing FDI into infrastructure development is that most of the investments do not have a direct return, and hence the government usually bears the costs. The challenges faced by governments is that they sign the agreements which are valued in hard currencies while they budget in their local currencies. Changes in the exchange rates during the project could adversely affect the host government (Martin & Bracey, 2016). If the exchange rates change for the better, then the government benefits, but if they change for the worse, the government has a budget deficit. When this happens, the unfortunate situation is viewed as a political act, not as a business deal gone wrong (Berry, 2013). To protect investors from their countries, the Asian and Latin American governments make it mandatory for the host governments to guarantee the exchange rate for payments made in foreign currencies.

2.3.3 FDI in Non-extractive and Non-infrastructure Sectors

FDI in the sectors of production that is, manufacturing, processing, assembly, services, retail and agribusiness are considered risk free, a concept that might be misleading. The old thinking is that the investor in non-extractive and non-infrastructure sectors do not cause harm to the environment, and the expectation to treat the employees at international standards. Research reveals that investors behave differently depending on whether their work is to cater to the export market or for the local market (Ietto-Gillies, 2012). The competition they face on international markets that usually looks at how they produce their products and the way they pay their taxes and treat employees. However, when they are dealing with local markets, they usually do not face stiff competition, and they hence do not feel obliged to respect some international laws.

2.4 Vacillations and Oscillations on the determinants of Household Indebtedness in Namibia

2.4.1 Changes in household income

Keynesian theory present empirical evidence to circumscribe that adverse income multiplier effects may, under certain situations, be outweighed by wealth impacts or by variances in households ' viewpoint of their permanent income (Bhattacharya, 2016) . The household stratum will be more sensitive to dynamism in interest rates, individually if they are unforeseen, and variations in household income such as that caused by unemployment (Ranciere, 2014). The exorbitant house prices are relative to household revenue; the more debt new domiciliary will have to expense themselves to purchase housing (Benson, 2017). However, there can be an issue of causal nexus at this point: the more domiciles borrow to procure housing, the more house prices rise relative to income rise, which in turn necessitates even more borrowing by new households desiring to purchase housing (IMF , 2014). Hypothesising that the quantum of the debt -service disbursement in proportion to disposable income matters for the sustainability of housing, it could be contended that the nominal interest rate is more pertinent (Benson, 2017). The pliability of the housing supply will also play a fundamental role in recognising the comparative cost of housing. The elasticity, the more an increase in scrounging for housing will elucidate a rise in house prices rather than an upsurge in construction activity.

2.4.2 Changes in interest rates.

According to Jacobson, (2004), household debt increased due to a decline in interest rates and, higher house prices may result in higher final wealth and better borrowing conditions for many households Debelle, (2004) has also found that much of the increase in household borrowing that has observed the elucidation by the combination of declining interest rates, in both real and nominal terms, and financial deregulation. In contrast, the Bank of Namibia indicated that despite the increase in interest rate household borrowing is still increasing (Bank of Namibia, 2015). The effect of variations in real interest rates on net indebtedness is ambiguous, incumbent upon the analogous quantum of the revenue and replacement impacts. An ebb in real interest rates lessen the return on the domicile asset holdings but shrinks the cost of borrowing and accentuates the present value of future labour income (Coyle, 2014). The effect of these various channels is probably to divaricate across domicile depending on their phase in the lifecycle. Older households with substantial accrued wealth and near the culmination of their working life expected to be more affected by the lower returns on their wealth whereas younger households are likely to be more influenced by the lower cost of borrowing.

2.4.3 The household house prices.

Taking into cognisance the house purchase decision suggests higher homeownership rates correlation with more significant levels of domicile indebtedness (Deaton, 2014). This summary is incumbent upon the proprietorship of the rental housing stock. If the domestic sector owns the rental stock, households who are landlords may still be expending debt in buying the rental stock (Badia, 2015). The link between home proprietorship and indebtedness is counted on critically on the cost of housing. The higher house prices are proportionate to household income; the more debt new domiciles will have to spend on purchasing houses (Hofman, 2017). However, there can be an issue of the concatenation of events at this point: the more households borrow to purchase housing, the more house prices rise compared to revenue, which in turn necessitates even more borrowing by new domiciles wishing to buy housing (Klyuev, 2014). The elasticity of the housing supply will also play a vital role in deciding the relative cost of housing (Badia, 2015). The lesser the elasticity, the more an upsurge in borrowing for housing will render into a rise in house prices rather than an upsurge in construction activity (Magrabi, 2015).

2.4.4 Housing equity withdrawal

Part of the borrowing has occurred in the form of a withdrawal of equity from the housing stock (Whitehead, 2016). This process of housing equity withdrawal has furnished a boost to household expending during the recent plunge, but it may be precisely susceptible to variations in expectations of domicile about future income growth, house price mobility or mortgage interest rates, with consequent acrimonious effects on the macroeconomy if the strides of withdrawal were to reverse (OECD , 2012). One feature of the acceleration in domestic indebtedness which has had a profound effect on the macroeconomy has been the growing predisposition of domicile to extract equity from the value of their houses to pecuniary consumption or the purchase of other assets (Kluev, 2016). This process of housing equity extraction has played a role in inspiring consumption in a plethora of nations in recent years, most conspicuously the United States, the United Kingdom, Netherlands, Australia and Ireland. In the Netherlands, after furnishing a massive boost for some time, this impact has currently been experienced in reverse (Chiquellar, 2012).

2.4.5 Excessive consumption

Some clients will take on an awkward amount of debt and later find themselves pecuniary overstressed and incapable of reimbursing. Such work might result from, merely overembellish the immediate merits of the creditor undervaluing the cost of the debt recompense, a deficiency of self-control or a low level of knowledge about commercial matters (Bogart, 2012). Some outside market factors might also have inspiration for clients to expand excessively; for instance, they might be inspired by declining interest rates or by inflated expectations of future earnings (Casin, 2014). Additionally, lax lending criteria that might permit a previously overstressed borrower to qualify for more debt quotation. Predominantly, lenders’ non-disclosure of essential credit information and other fallacious customs might debase the client’ decision making (Goldblatt, 2014). Pragmatically, the relative impact of excessive expenditure on the debt reimbursement performance is using several proxies for the level of indebtedness, conspicuously, the quantum of the purchase, the size of the credit balance and credit limit, the statistics of credit commitments held or the debt-service ratio (Nelson, 2012). It is worth noting that the incapacitation to find a global indicator of excessive bestow could is as the result of data restrictions rather than a personal choice (Casin, 2014).

2.4.6 Unemployment

In the common sense of the term, unemployment is a scenario in which those who are able and enthusiastic to work at the preponderating wage rate do not find a job (Dwivedi, 2014). The natural scale of unemployment is the magnitude of unemployment that occurs when GDP at its abeyant level and if preserved, will result in a constant rate of inflation. Youth do not eat GDP; they want food on the table. The GDP should translate in creating employment for the youth. NAIRU is the non-accelerating inflation rate of unemployment in the absence of shocks (Tambakis, 2013). It is the natural rate of unemployment which is the balanced rate of unemployment in a dog eat dog economy that correlates to potential GDP, and the conjoined to stable inflation (Lipsey & Chrystal, 2013).

Inflation is delineated as a continuous increase in the price level or a continuous fall in the value of money (Atmanand, 2015). Inflation can also be chronicled as an increase in dollar value of aggregate expenditure that outpaces the growth of real output. Those measures would appear to embrace attaining lackadaisical growth of nominal spending through budget cuts, tax aggrandizement and tight monetary policy (Hall, 2016). Inflation is generally delineated as the upsurge in the cost of living, primarily evaluated in terms of a consumer price index (CPI) (Economic Policy Institute , 2012) The guru does admit that the definition is arbitrary; but given the seminal status of his work, it is still the definition first quoted in the available literature.

Undeterred by the contemporary proclaimed lowering in the prices of basic food in Windhoek, the economic quagmire is that for the next few months’ Namibian domiciliaries would be short of money, particularly households with meagre incomes (UN-habitat, 2013). According to the up to the minute inflationary figures in January inscribed the highest annual inflation in the last seven years (New Era, 2017). When correlated to the price increases encountered in December, the inflationary numbers for January is quite a cogent leap. Yearly inflation for January came in at 8.2 per cent, up from the 7.3 per cent decoded in December 2016 (New Era, 2017). The unemployment rate in Namibia abated to 28.10 per cent in 2014 from 29.60 per cent in 2013. Mr Steytern articulates that Namibian unemployment rate economy has reached very high (New Era, 2017). Unemployment Rate in Namibia averaged 26.33 per cent from 1997 until 2014, climaxing to an all-time high of 37.60 per cent in 2008 and 40% in 2019 and a record low of 19.50 per cent in 1997 ( Trading Economics, 2017) Interest Rate in Namibia mean 7.13 per cent from 2007 until 2017, reaching a climax of 10.50 per cent in May of 2007 and a chronicle which is low of 5.50 per cent in August of 2012 (Ipumbu, 2017).

3. Main causes of unemployment

In some books, the words cause, and types are interchangeably used. However, there is a distinction. Type is the label given to describe the main common characteristic of some unemployment, while the cause is more analytical, an attempt is made to explain how some unemployment has arisen. Greece’s youth unemployment has been precipitated by the country crippling high debt. In Malaysia, the predicament is a skills mismatch. Other reasons could be due to lack of work experience, student loan debts which affect student credibility to get future loans. Causes of unemployment can be broadly divided into demand and supply factors: Demand deficiency unemployment is caused by the deficiency of demand for goods and services, and as a result, firms lay off workers. Usually, when the economy is in the recession stage of the economic or trade cycle, and there is little economic activity. When the aggregate demand denoted with AD in figure 2.1 below is at national income Y at that equivalent there is no demand deficient unemployment.

Figure 2.1 Causes of Unemployment and Inflation

Abbildung in dieser Leseprobe nicht enthalten

Causes of Unemployment and Inflation

When the AD curve deviates to AD equilibrium income tumbles to. The concomitant unemployment is called demand deficient unemployment. The term full employment occurs when there is demand deficient unemployment, and the economy is fully employed (Pollin, 2012). This can be annihilated by raising aggregate demand without setting up any inflationary pressures. Inflation can also be depicted as weakening in the real value of money—a loss of procuring ability in the medium of exchange which is also the pecuniary unit of account (Schartz, 2016). Keynesians contend that a shortage of aggregate demand is one of the critical causes of unemployment. Monetarists view Supply-side factors such as strong trade unions demanding high wages as causes of unemployment as firms employ less labour while the supply of labour increases, as shown below:

3.1 Types of unemployment

Seasonal unemployment is transient and occurs in certain industries where economic activity is in specific periods or seasons, and ensamples are tourism, agriculture and construction industries. There is a high demand for labour during specific periods of the year, and then most of the workers are laid off during off-peak periods.

Frictional unemployment is of short-term duration. It points to secondary school or college graduates who are searching for jobs, as well as personas who are in between jobs, the transitional period between workers leaving one job and starting another. Frictional unemployment is also a symptom of imperfections in the market, such as lack of knowledge, the geographical immobility of labour or a mismatch between the requirements of the employers and the available skills of the unemployed.

The more efficiently the job market is matching people to jobs, the lower this form of unemployment will be. However, if there is imperfect information and people do not get to hear of jobs available that may suit them, then frictional unemployment is likely to be high. Structural unemployment refers to long-term changes in the pattern of demand and supply in an economy. On the demand side, a firm may fail to compete with rival firms, demand for the company’s product declines and the firm is likely to lay off workers and close the business.

Changes in the supply of a product, for an example, if the product like copper ore is getting depleted, there is no need to employ miners, and this can also lead to unemployment in the Copper belt. It may also result from vicissitudes in the production methods labour is replaced by machines or capital equipment, termed technological unemployment. Structural unemployment also includes regional unemployment; some regions in a country may have higher unemployment levels compared to other regions because of different regional economic performances. Unemployment results because individuals do not respond quickly to new job opportunities; they find themselves with no readily marketable talents. Their skills and experiences are unwanted, as they have become obsolete.

Cyclical unemployment is the same as a deficiency in demand unemployment. It is characterized by fluctuations in economic growth, characterized by booms and recessions, the trade cycles. During the recession phase, there are high levels of unemployment. Voluntary unemployment is a relatively new concept, delineated by the monetarists as being due mostly to high state benefits, either unemployment benefits or being on welfare. They are causing people to be unwilling to work at existing low wage rates. They realize that they are “better off” not working and receiving state benefits.

[...]

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Details

Title
The Vacillations and Oscillations of Foreign Direct Investment, Debt, Unemployment and Economic Growth Nexus in Namibia
Course
Research Paper
Grade
Masters
Author
Year
2020
Pages
49
Catalog Number
V536769
ISBN (eBook)
9783346145895
Language
English
Notes
Tags
vacillations, nexus, growth, economic, unemployment, debt, investment, direct, foreign, oscillations, namibia
Quote paper
David Mpunwa (Author), 2020, The Vacillations and Oscillations of Foreign Direct Investment, Debt, Unemployment and Economic Growth Nexus in Namibia, Munich, GRIN Verlag, https://www.grin.com/document/536769

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