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Can Chinese investment improve the labor market in the Middle East?

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  • Yao, Wen

Abstract

Based on data from 2003 to 2023 on China's direct investment in 16 Middle Eastern countries, this paper constructs a multi-country panel data model to systematically evaluate the impact of Chinese investment on labor markets in the Middle East. The findings show that China's direct investment significantly increases overall and male labor force participation rates in host countries, while its effect on female labor participation remains limited. Mechanism analysis indicates that Chinese investment indirectly enhances employment opportunities by improving financial development and capital allocation efficiency in recipient countries. Further heterogeneity analysis reveals that the employment effects are more pronounced in countries with stronger technological foundations, political stability, and more robust democratic institutions. This study not only fills a gap in the empirical literature on the labor market impacts of Chinese investment in the Middle East but also provides new evidence on the role of emerging capital in structural transformation under the Belt and Road Initiative.

Suggested Citation

  • Yao, Wen, 2025. "Can Chinese investment improve the labor market in the Middle East?," International Review of Economics & Finance, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025007208
    DOI: 10.1016/j.iref.2025.104557
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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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