A STUDY OF THE NEXUS BETWEEN TRADE-RELATED VARIABLES AND EMPLOYMENT IN THE NEPALESE ECONOMY

Abstract

The primary purpose of this paper is to investigate the effect of trade-related variables and employment using the yearly time series data for the period 2000 to 2020. The evidence of this study suggests that gross fixed capital formation, export, and population size have a significant impact on employment. This indicates that the export starting effect on the total workers is more substantial than wages per worker. This study examined the impact of the Foreign Direct Investment in employment creation in Nepal. It was found that these variables had an insignificant impact on employment, where the results showed a positive impact on the number of total workers due to export and gross capital formation. Hence, the manufacturing sector of Nepal can provide employment with export-quality goods and services. Moreover, it was also revealed that the most significant effect regarding employment among variables is gross capital formation. Overall, this study found a causal effect of the export entrance on employment. As Hwang et al. (2017) argued that exports have an effect on the employment of both types of workers could be different. Here, further work needs to be carried out to explain the specific channels in which export activity increases employment. It is also necessary to conduct relevant research considering the characteristics of both employers and employees. Moreover, discuss different export areas local investors are interested in.