Theoretical Research And Empirical Analysis Of The Effect Of FDI On The Employment In China

Along with the continuous deepening of reform and opening to the outside world, Foreign Direct Investment (FDI) has far-reaching effects on many aspects of China's economy. Employment, the basis of people's lives, is one of them. Under China's increasingly serious employment circumstance, it's important to research on the effect of inward FDI on employment growth. This paper systematically analyzes the effects of FDI on employment in China for three aspects: overall analysis, regional analysis and industrial analysis. Both the qualitative and quantitative methods and the normative and empirical analysis are applied to this study.In the theoretical research part, this paper has analyzed the duality of FDI effect on employment: creation effect and crowding-out effect. Then a theoretical framework has been established to analyze the various factors which determine the employment effects.In the empirical tests part, we find that FDI has promoted the growth of the overall employment of China. When the FDI stock rises 1%, it will pull the overall employment rising 0.015%. The effects of FDI on employment in different regions are not the same. Since the 1990s, the crowding-out effect is much bigger than the creation effect in eastern China. However, FDI has promoted the employment in western China. Then, by the cointegration analysis, we find that there is a long-term balanced relationship between FDI and employment in the secondary and tertiary industry. FDI has played a positive role in promoting the upgrade of the industrial structure and employment structure. Therefore, we have to guide the FDI flows to the tertiary industry. It's an important solution to solve the labor transfer problem in the process of economic structure upgrading.At last, based on the Theoretical Research and Empirical Analysis, several policy proposals have been put forward.