An Empirical Analysis of the Effect of FDI on Employment in China

Encouraged by the country´s ongoing policy reforms, Foreign Direct Investment is flowing rapidly into China. This paper investigates the impacts of Foreign Direct Investment inflows on China´s macro employment levels. It uses annual data for the period 1993-2006, to estimate a regression model for Foreign Direct Investment and China´s total employment, employment in primary industry, employment in secondary industry, employment in tertiary industry, respectively. Analysis indicates that Foreign Direct Investment has a significant impact on the level of employment in China. The results provide insights for policy formulation and implementation.