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The home-employment effect of FDI from developing countries: in the case of China

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  • Huiqun Liu
  • Jinyong Lu
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    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.

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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal Journal of Chinese Economic and Foreign Trade Studies.

    Volume (Year): 4 (2011)
    Issue (Month): 3 (October)
    Pages: 173-182

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    Handle: RePEc:eme:ceftpp:v:4:y:2011:i:3:p:173-182

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    Related research

    Keywords: China; Developing countries; Emerging economy; Employment; Employment effect; International investments; Outward foreign direct investment;

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    References

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    1. Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany.
    2. L. Cuyvers & M. Dumont & G. Rayp & K. Stevens, 2002. "Home Employment Effects of EU Firms' Activities in Central and Eastern European Countries," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 02/158, Ghent University, Faculty of Economics and Business Administration.
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    13. Jaan Masso & Urmas Varblane & Priit Vahter, 2007. "The Impact of Outward FDI on Home-Country Employment in a Low-Cost Transition Economy," William Davidson Institute Working Papers Series wp873, William Davidson Institute at the University of Michigan.
    14. Braunerhjelm, Pontus & Oxelheim, Lars & Thulin, Per, 2005. "The Relationship Between Domestic and Outward Foreign Investment Revisited: The Impact of Industry-Specific Effects," Working Paper Series in Economics and Institutions of Innovation 35, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
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    16. repec:fth:iniesr:522 is not listed on IDEAS
    17. Kokko, Ari, 2006. "The Home Country Effects Of Fdi In Developed Economies," EIJS Working Paper Series 225, The European Institute of Japanese Studies.
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