Research On The Employment Effects Of FDI In China's Automobile Industry

Automobile manufacture industry has been a key domain that government stresses to invest and develop. As an important industry for China's national economy, it has showed the characteristics of good relation of industries, strong capital accumulation ability and great employment. National Development and Reform Commission in 2005 clearly declaimed that automobile industry had become a pillar industry of national economy of China. Since the early 90s in 20th century, the roles and position of FDI improves gradually by the rapidly growth of FDI in the automobile industry. Not only it supplies funding for the rapid development of China's automobile industry, which made China's auto corporations improving and mastering foreign advanced production technology and management experience, but also alleviates the employment pressure effectively in China. Meanwhile, employment situation becomes gradually difficult, increasing of employment has been weak and the employment pressure is increasing. The issue of employment is increasingly becoming central focus of China's theoretical industry and the relevant functional departments. The thesis, based on previous study of relation of FDI and employment, will focus on the effect of FDI on employment in automobile manufacture industry through theoretical analysis and empirical research. The purpose of this study is to sort out the relationship between FDI and employment so that FDI can contribute more effectively on our employment in the automobile manufacturing industry and aim to the purpose of reducing the pressure on employment under the circumstances of wide inflows on FDI and China's increasingly serious employment. Its conclusion will provide the inspiration for the policies of FDI in the automotive industry.The paper emphasizes on the effect of FDI on the quantity and quality of employment in the automobile industry, on the basis of summarizing the theory and researching actuality of the relationship of FDI and employment. Firstly, this article grasps the characteristics of the effects of FDI on employment through an analysis between FDI and employment. Secondly, this paper does the empirical testing on relation between FDI and employment of the automotive industry by building co-integration test and multiple regression model and compare with the preceding theoretic and empirical observation. Finally, we will put the countermeasures and proposals according to the results. The researching results show that in automobile manufacture industry FDI has a dual impact on the quantity and quality of employment, at the same time improving the quality of employment has a negative impact on the number of jobs. With this result, the proposals are that government continues to attract foreign investment as well as pay attention to train technical personnel contributing to the number of jobs and the quality of employment increasing. As FDI increases, indirect effects of FDI on employment continue growing, domestic-funded enterprises of the same occupation have some squeezing effect and impacts the employment. In order to alleviate this phenomenon, our government can establish inner-funded enterprises which complementing with foreign-funded to reduce competition among the same industry. Through these measures we might achieve the aim of high efficiency of utilization of foreign investment and improving the employment on domestic capital corporations.