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Does Outward Foreign Direct Investment Boost Employment in the Home Country? Evidence from China’s Microlevel Data

Author

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  • Ni-Sha Jia
  • Yong-Hui Han
  • Ke-Ming Peng
  • Hong-Zhen Lei

Abstract

Does outward foreign direct investment (OFDI) create (or transfer) employment in (or from) the home country? To examine this question, we analyze how OFDI with different motivations influences employment in the home country, using micro data from 552 Chinese manufacturing enterprises investing abroad. We use two sets of indices, namely, the absolute employment amount and relative employment amount, and adopt a difference-in-differences methodology. Overall, we find that OFDI increases both the absolute and relative employment amount. In particular, market-seeking OFDI increases the absolute employment amount, but not the relative employment amount. Technology-seeking OFDI significantly promotes both absolute and relative employment amount of the parent firm in the home country, while resource-seeking and efficiency-seeking OFDI have no significant influence on employment at enterprises in the home country. The effect on home-country employment depends on the host country. Finally, investment in developed countries can significantly increase home-country employment, while investment in developing countries does not have a significant influence on home-country employment.

Suggested Citation

  • Ni-Sha Jia & Yong-Hui Han & Ke-Ming Peng & Hong-Zhen Lei, 2019. "Does Outward Foreign Direct Investment Boost Employment in the Home Country? Evidence from China’s Microlevel Data," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(15), pages 3386-3403, December.
  • Handle: RePEc:mes:emfitr:v:55:y:2019:i:15:p:3386-3403
    DOI: 10.1080/1540496X.2019.1601550
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    Cited by:

    1. Prajukta Tripathy & Pragyanrani Behera & Bikash Ranjan Mishra, 2023. "Study of linkages between productivity, export, and outward foreign direct investment: An empirical perspective of Indian manufacturing industries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1527-1548, April.

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