Influence Of Host Country Labor Standards On China’s Outward Direct Investment

Based on the theory of efficient wage, the paper attempt to build a model to explain the relationship between the wage of labors and their labor productivity.Then used the panel data of China’s OFDI to 68 countries over the year 2003 to 2011 and the method of Two Stage Least Squares models to do an empirical research on the influence of labor standards between China and host countries on China’s OFDI. The results showed a positive correlation between China’s OFDI and host countries’ labor standards, this is different from most of the views. What’s more, after control endogenous, the conclusion remained valid.The policy meaning of this conclusion is mainly manifested in the following two aspects: it is a powerful retort to the popular talk of “race to the bottom” in the field of international trade. Developed countries by pushing labor standards for all countries, especially developing countries to attract direct investment speculation and criticism is unfounded. In addition, there is no need for government in developing countries to worry the problem that high labor standards will reduce the ability to attract direct investment. At the same time, developing countries should also actively deal with the problem of labor standards in international negotiations. Dovetailing relevant matters into our legal system as soon as possible under the principle of legal is reasonable.