An Analysis Of The Effect Of China’s Outward Foreign Direct Investment On Domestic Employment

With the implementation of the "going out" strategy,China’s foreign direct investment has developed rapidly.In 2015 and 2016,China became a net foreign investment export country for two consecutive years.In the future development,China will continue to invest in foreign direct investment with a relatively high proportion.Since FDI will affect the economy of a country,the impact of FDI on the macro economy is mainly reflected in economic growth,international trade,and domestic employment.However,the proportion of labor force in China is high,and the employment problem is still significant.What is the impact of a country’s outward FDI on domestic employment? Will it promote domestic employment or curb domestic employment? In addition,the degree of economic development in each region is different.As a transitional country,when studying the effect of China’s OFDI on domestic employment,the dynamics and differences of institutional factors are particularly effective.Among them,the labor marketization is a transitional economy among all institutional factors.The impact is relatively large.Therefore,this paper mainly studies the following two questions:(1)What is the impact of China’s foreign direct investment on domestic employment?(2)What is the impact of foreign direct investment on domestic employment in regions with different levels of labor marketization?This article from a macro perspective,OFDI through the role of input and technology factors,and then affect the mother-to-children out and employment,through the Cobb-Douglas production function to further improve the model,the use of China’s 29 provinces from 2005 to 2015 The panel data of the year and through the Sys-GMM method examined the overall effect and regional differences of Chinese OFDI’s impact on domestic employment,and finally reached the conclusion:From a national perspective,China’s implementation of OFDI can promote domestic employment.Although in the short term,OFDI has a negative effect on the employment of home countries,but in the long term,OFDI has a huge positive effect on the employment of home countries,which is conducive to increasing domestic employment.This further shows that OFDI can increase the human capital,promote technological R&D and technological spillover,optimize the industrial structure and accelerate the labor market process.This will affect the total factor productivity and effectively allocate resources.In the short term,part of the labor force may be capital and Substitution by technology;In the long run,the expansion of output and structural adjustment are caused by the improvement of total factor productivity and the improvement of resource allocation.The positive effect of OFDI is greater than the negative effect of OFDI and promotes employment.From a local point of view,due to the difference in the degree of labor marketization in different regions,it will make the different regions to carry out OFDI,the employment of the region is different in size.In regions with a high level of labor marketization,OFDI has a huge positive effect on the employment of home countries: in the short-term,OFDI has a negative effect on employment;in the long-term,OFDI has a positive effect on employment.In areas with a low degree of labor marketization,OFDI has no significant effect on employment in the short-term,and the long-term OFDI has no effect on employment.This shows that OFDI has a close relationship with domestic employment and labor marketization.