Outward FDI, industrial structure upgrading and domestic employment: empirical evidence from the Chinese economy and the belt and road initiative

Does outward foreign direct investment (OFDI) create or diminish jobs in the home country? We develop a theoretical model to study the relation between OFDI and domestic employment and to evaluate the roles that industrial structure upgrading and the Belt Road Initiative (BRI) play therein. Using Ch...

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Bibliographic Details
Published inJournal of Asian economics Vol. 74; p. 101303
Main Authors Liao, Hongwei, Yang, Liangping, Dai, Shuanping, Van Assche, Ari
Format Journal Article
LanguageEnglish
Published Elsevier Inc 01.06.2021
Subjects
BRI
Employment impacts
Home country
Industrial upgrading
OFDI
Industrial upgrading
F62
Employment impacts
F21
Home country
E24
OFDI
BRI
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Summary:Does outward foreign direct investment (OFDI) create or diminish jobs in the home country? We develop a theoretical model to study the relation between OFDI and domestic employment and to evaluate the roles that industrial structure upgrading and the Belt Road Initiative (BRI) play therein. Using Chinese provincial panel data during the period 2005–2018, and applying simultaneous equation modelling techniques to control for endogeneity, we find that China’s OFDI presents a significant positive impact on domestic employment, and the BRI moderates this impact positively. As a mediating factor, industrial structure upgrading suppresses employment, but the overall employment impact of OFDI remains positive. We construct panel simultaneous equation models to control for the endogeneity problem caused by simultaneity, and find that our main findings are still supported.
ISSN:1049-0078
1873-7927
DOI:10.1016/j.asieco.2021.101303