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Regional Marketization, OFDI, and Sustainable Employment: Empirical Analysis in China

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  • Zhihua Ruan

    (School of Business Administration, Wonkwang University, 460Iksandae-ro, Iksan, Jeonbuk 54538, Korea)

  • Wenhua Liu

    (School of Economic and Management, Yichun University, Yichun 336000, China)

  • Sanggyun Na

    (School of Business Administration, Wonkwang University, 460Iksandae-ro, Iksan, Jeonbuk 54538, Korea)

  • Xianhua Tan

    (School of Business Administration, Wonkwang University, 460Iksandae-ro, Iksan, Jeonbuk 54538, Korea)

  • Tianqiao Xue

    (School of Business Administration, Wonkwang University, 460Iksandae-ro, Iksan, Jeonbuk 54538, Korea)

Abstract

To maintain sustainable development, the government’s macro control is very important, but the system construction of the market itself can’t be ignored. From the perspective of aggregate supply, OFDI (outward foreign direct investment) in developing countries can sustainably promote domestic employment through different kind of channels such as human capital, a reverse spillover of the international technology, and marketization processes. Based on 30 provincial panel data from 2005 to 2017, stating from the C–D production function, this article empirically estimates the total effect and regional differences in the effect of OFDI on domestic employment in China by using the main approach of Sys-GMM. The results show that the promotion effect of OFDI on domestic employment has an obvious lag; the faster the marketization process, the more significant the current period’s substitution effect and the lagged period’s promotion effect of OFDI on domestic employment. This means that it is a lagged-period process for OFDI to enhance total factor productivity and realize the effective allocation of labor resources through various channels. Furthermore, whether the domestic promotion effect of OFDI can be effectively exerted is closely related to the process of domestic marketization. A good market system environment can effectively improve the efficiency of labor resources allocation, thus promoting the sustainable development of domestic employment. China’s market-oriented transformation has not yet been completed. The sustainable growth of China’s employment depends on further promoting a market-oriented economy. Therefore, it is suggested to accelerate the improvement of market mechanisms and related system construction, strengthen the role of the government in public service, and promote the coordinated development of OFDI and IFDI (inward foreign direct investment) in various regions to promote the sustainable development of employment.

Suggested Citation

  • Zhihua Ruan & Wenhua Liu & Sanggyun Na & Xianhua Tan & Tianqiao Xue, 2019. "Regional Marketization, OFDI, and Sustainable Employment: Empirical Analysis in China," Sustainability, MDPI, vol. 11(15), pages 1-17, July.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:15:p:4101-:d:252814
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    References listed on IDEAS

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    Cited by:

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    2. Huang, Hongyun & Wang, Fengrong & Song, Malin & Balezentis, Tomas & Streimikiene, Dalia, 2021. "Green innovations for sustainable development of China: Analysis based on the nested spatial panel models," Technology in Society, Elsevier, vol. 65(C).
    3. Mei Ling Wang & Si Lu Pang & Feng Wang & Xin Guo & Zheng Xia He, 2021. "Dynamic interaction between outward foreign direct investment and home country industrial upgrading: Regional differences in China," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2293-2317, December.
    4. Yijia Song & Ruichen Deng & Ruoxi Liu & Qian Peng, 2020. "Effects of Special Economic Zones on FDI in Emerging Economies: Does Institutional Quality Matter?," Sustainability, MDPI, vol. 12(20), pages 1-21, October.
    5. Yu, Mingzhe & Deng, Xin, 2021. "The Inheritance of Marketization Level and Regional Human Capital Accumulation: Evidence from China," Finance Research Letters, Elsevier, vol. 43(C).
    6. Ting Zhu & Xiaqing Chen & Wenwen Zhang & Basil Sharp, 2023. "Analysis of the Spatial–Temporal Evolution of the Digital Economy and Its Impact on the Employment Structure in China from 2001 to 2020," Sustainability, MDPI, vol. 15(12), pages 1-18, June.
    7. Wang, Shuhong & Wang, Xiaoqing & Lu, Binbin, 2022. "Is resource abundance a curse for green economic growth? Evidence from developing countries," Resources Policy, Elsevier, vol. 75(C).

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