The home‐employment effect of FDI from developing countries: in the case of China
| DOI | https://doi.org/10.1108/17544401111178212 |
| Published date | 04 October 2011 |
| Date | 04 October 2011 |
| Pages | 173-182 |
| Author | Huiqun Liu,Jinyong Lu |
| Subject Matter | Economics |
The home-employment effect
of FDI from developing countries:
in the case of China
Huiqun Liu
School of Economics, Tianjin University of Commerce, Tianjin, China, and
Jinyong Lu
China Research Center for FDI, School of International Trade and Economics,
University of International Business and Economics, Beijing, China
Abstract
Purpose – The current extensive literature on the home-country employment effect of foreign direct
investment (FDI) focuses almost exclusively on the investments from developed countries. The
purpose of this paper is to analyze the home-country employment effect in China, a country that has
emerged as an important emerging economy increasingly integrated into the global economy.
Design/methodology/approach – This study investigates the long-run relationships between
outward FDI and employment in China. Johansen’s cointegration technique and Toda and
Yamamoto’s Granger causality tests are applied to data for the period 1982-2007.
Findings – The results indicate that outward FDI from China had a positive impact on the
home-country employment growth, especially in tertiary industry. These results also imply that the
logic of the outward investments from low-cost transitional and developing economies differs from
that of high-income countries.
Originality/value – In this paper, the authors analyze the home-country employment effect of FDI in
China.
Keywords China, International investments, Employment, Developingcountries, Emerging economy,
Outward foreigndirect investment, Employment effect
Paper type Research paper
I. Introduction
The issue about the home-country effects of foreign direct investment (FDI) has
reappeared in a new form. Until recently, outward foreign direct investment (OFDI) was
mainly made by firms originating from developed countries. However, the growing
importance of OFDI from the Asian emerging economies and new EU member states in
Central and Eastern Europe has made it necessary to analyze the impact of OFDI on the
parent firms from those countries, and more broadly on their home economies.
The current paper looks at the impact of outward investments on employment in the
home country. The impact on employment has become one of the most critical issue s for
policy makers and labor organizations in developed countries for some time. The public
sentiment is highly wary of the risk of losing jobs t o the target countries
The current issue and full text archive of this journal is available at
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JEL classification – F21, J23
The authors gratefully acknowledge financial support from the Humanities and Social
Science Fund of MOE (No. 09YJC790198) and MOE Project of Key Research Institute of
Humanities and Social Sciences at Universities (No. 2009JJD790006).
Home-
employment
effect
173
Journal of Chinese Economic and
Foreign Trade Studies
Vol. 4 No. 3, 2011
pp. 173-182
qEmerald Group Publishing Limited
1754-4408
DOI 10.1108/17544401111178212
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