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FDI and Job Creation in China


  • Karlsson, Sune

    (Örebro University)

  • Lundin, Nannan

    (Research Institute of Industrial Economics (IFN))

  • Sjöholm, Fredrik

    (Research Institute of Industrial Economics (IFN))

  • He, Ping

    (National Bureau of Statistics of China)


This paper examines the effect of FDI on job creation in the Chinese manufacturing sector. As one of the world’s largest recipients of FDI, China has arguably benefited from foreign multinational enterprises in various respects. However, one of the main challenges for China, and other developing countries, is job-creation, and the effect of FDI on job creation is uncertain. The effect depends on the amount of jobs created within foreign firms as well as the effect of FDI on job creation in domestic firms. We analyze FDI and job creation in China using a large sample of manufacturing firms for the period 1998-2004. Our results show that FDI has positive effects on employment growth. The positive effect of job creation in foreign firms is associated with their firm characteristics and, in particular, their access to export markets. There also seems to be a positive indirect effect on job creation in domestically owned firms, presumably caused by spillovers.

Suggested Citation

  • Karlsson, Sune & Lundin, Nannan & Sjöholm, Fredrik & He, Ping, 2007. "FDI and Job Creation in China," Working Paper Series 723, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0723

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    Cited by:

    1. Njangang, Henri & Nembot Ndeffo, Luc & Noubissi Domguia, Edmond & Fosto Koyeu, Prevost, 2018. "The long-run and short-run effects of foreign direct investment, foreign aid and remittances on economic growth in African countries," MPRA Paper 89747, University Library of Munich, Germany.
    2. Samuel Ajayi-Obe, 2020. "Key Determinants of Job Creation: A Comparative analysis between OECD Countries and Emerging Economies," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 4, pages 619-647, December.
    3. Simon Wong, Chak Keung & Gladys Liu, Fung Ching, 2011. "A study of pre-trip use of travel guidebooks by leisure travelers," Tourism Management, Elsevier, vol. 32(3), pages 616-628.
    4. Taotao Chen & Afonso Fleury & Maria Tereza Fleury & Xiao Chen, 2020. "Government, MNEs and Industry Development: A Perspective of Game Theory," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 19(1), pages 1-26, June.
    5. Ramesh Chandra Das & Kamal Ray, 2022. "Linkages Between Employment and Net FDI Inflow: Insights from Individual as Well as Panel Data for Emerging South Asian Labour Market," Global Business Review, International Management Institute, vol. 23(3), pages 785-803, June.
    6. Tung Son Ha & Vu Tuan Chu & Mai Tuyet Thi Nguyen & Dung Hoai Thi Nguyen & Anh Ngoc Thi Nguyen, 2021. "The impact of Greenfield investment on domestic entrepreneurship," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-16, December.
    7. Tsai Chang-hsien, 2011. "International Jurisdictional Competition under Globalization: From the U.S. Regulation of Foreign Private Issuers to Taiwan's Restrictions on Outward Investment in Mainland China," Asian Journal of Law and Economics, De Gruyter, vol. 2(1), pages 1-102, April.

    More about this item


    China; Employment; Foreign Direct Investment; Job Creation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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