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

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.

Citation

Liu, H. and Lu, J. (2011), "The home‐employment effect of FDI from developing countries: in the case of China", Journal of Chinese Economic and Foreign Trade Studies, Vol. 4 No. 3, pp. 173-182. https://doi.org/10.1108/17544401111178212