An Analysis Of The Impact Of The Rise Of Labor Price On Outward Direct Investment

In the context of globalization of production,active participation in international cooperation is very important for a country,so our government took “go out”development strategy as a policy measure for economic development.China's outward direct investment(ODI)has achieved a historic breakthrough in 2014,reaching US $ 123.12 billion,up 14.2% from the previous year and accumulating 882.64 billion dollars in foreign direct investment.In order to realize the political goal of economic development and social stability,the Chinese government must vigorously develop the foreign direct investment.It is an important measure of the government to “stabilize the economic growth and adjust the industrial structure”and play a decisive role in China's economic development.On the other hand,Chinese enterprises can absorb foreign advanced technology,accelerate the optimization of industrial structure,change the export products Low value-added unfavorable situation.At the same time,this article also observed that in recent years,China's labor prices have been rising,so this paper attempts to study whether the rise in labor costs is an important factor to promote foreign direct investment.Based on the situation of rising labor price,this paper discusses the impact of the rise of domestic labor price on Chinese enterprises' foreign direct investment and puts forward some suggestions.First of all,this paper illustrates the current situation of domestic labor cost changes,and explores the possible factors that affect the rise of labor price.The literature and data show that the labor price in China has maintained a rapid upward trend since the beginning of the new century.There are two main factors to accelerate the rate of labor price increases: First,rapid economic growth in the short term lead to rising labor demand;Second,the natural growth rate of low population and population aging reduce labor supply.Secondly,this paper introduces the present situation of foreign direct investment and the regional and industrial distribution differences.Studies show that China's foreign direct investment increased year by year,in 2014 accounted for 9.1% of global traffic.At the same time,nearly 70% of the capital has flowed to Hong Kong,British Virgin Islands,Cayman Islands and Luxembourg in the regional distribution.In the distribution of the industry,it is widely distributed in the first,second and third industries.The three industries(ie,services)are popular.Thirdly,this paper will focus on the impact of rising labor prices on China's foreign direct investment enterprises,divided into theoretical analysis and empirical research in two parts.In this paper,according to the end of 2014,China's investment in the host country's (region's) stock of more than 2 billion US dollars this standard,selected 35 countries(or regions)from 2003 to 2014 data.First,the static panel model was used to regress the data of 35 host countries (regions),and the dynamic panel model was used to test the robustness.Secondly,the 35 host countries (regions) were divided into two parts: the static panel model return.The empirical results of this paper show that labor price has a significant positive effect on the foreign direct investment.In order to maintain the original market share and international competitiveness,enterprises will choose to direct foreign direct investment to produce the way to increase the cost of production,export costs have increased significantly.For the two sub-samples,the rise in labor prices can significantly increase the foreign direct investment of Chinese enterprises,but for different types of host countries (regions),the degree of impact is different.Contrastive empirical analysis shows that China's labor price increases,the real wage higher than China's investment in China's enterprises more attractive,because these countries (regions) are usually technologically developed,the market is large and the spending power of residents is relatively strong.Finally,the policy recommendations.On the one hand,the government should strengthen the legislative work,encourage enterprises to carry out foreign direct investment,to solve the problems of insufficient capital and risk in the process of overseas investment,and to provide more convenience and preferential policies for Chinese enterprises in foreign direct investment;On the one hand,enterprises should absorb more,cultivate high-quality personnel,brand awareness,know how to protect their intellectual property rights.