First, not all the inward FDI is in fixed capital formation that expands productive capacity and employment, and neither does all of it go to the manufacturing sector. Second, the size of the manufacturing sector in the host country in relation to the existing stock of FDI plays a role: if that stock is small and the industrial sector is large, even a high growth rate of FDI may have little impact on employment. Finally, many factors unrelated to FDI may explain job creation in manufacturing.