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The Employment Effect of Inward FDI in China: What Do We Learn from the History?

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  • Hao Wang
  • Yuemei Ji
  • Qi Luo

Abstract

This study investigates the long-term influence of colonial legacy on the nexus between inward foreign direct investment (FDI) and labor market. We construct a panel dataset containing 285 Chinese cities 2011 to 2017 along with detailed information about Chinese modern history during 1842-1955). Our results show that the inward FDI has a positive effect on employment and such an effect is more pronounced in the regions with colonial influence than their counterparts. Further, we find that the experience of Western colonization strengthens the positive effect of inward FDI on employment whereas the experience of Japanese colonization weakens or even overturns this positive effect. These findings are robust to controlling for the endogeneity between inward FDI and employment as well as employing alternative measures for the colonization.

Suggested Citation

  • Hao Wang & Yuemei Ji & Qi Luo, 2020. "The Employment Effect of Inward FDI in China: What Do We Learn from the History?," CESifo Working Paper Series 8392, CESifo.
    • Handle: RePEc:ces:ceswps:_8392
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    More about this item

    Keywords

    colonial legacy; foreign direct investment; employment; Chinese modern history;
    All these keywords.

    JEL classification:

    • N01 - Economic History - - General - - - Development of the Discipline: Historiographical; Sources and Methods
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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