The Impact of FDI on Labor Productivity in China: Evidence from Panel Data 2003-2020——A Study on Fiscal Decentralization as a moderating variable

Authors

  • Jiawei He

DOI:

https://doi.org/10.54097/zrmnhm09

Keywords:

FDI; labor productivity; fiscal decentralization

Abstract

Based on the panel data of China’s 30 provinces, autonomous regions, and municipalities (hereinafter referred to as provinces) from 2003 to 2020, this paper empirically analyzes the impact of foreign direct investment (hereinafter referred to as FDI) on labor productivity by constructing a fixed-effects model, and further constructs a model to test the moderating effect of fiscal decentralization on the above two variables. The study shows that: 1) China's FDI has a positive promotion effect on labor productivity. 2) Taking 2008 as the boundary, the effect of China's FDI on labor productivity has significant stage heterogeneity. 3) Fiscal revenue decentralization and fiscal expenditure decentralization both positively regulate the relationship between FDI and labor productivity. Therefore, the Chinese government (as well as the governments of other developing economies around the world) needs to consciously introduce high-quality FDI that is suitable for the country's current development situation and to give local governments the right to select and introduce FDI that is suitable for local development to realize high-quality economic development.

Downloads

Download data is not yet available.

References

Alam, Abdullah, M. Usman Arshad, and WasimUllah Rajput. 2013. Relationship of labor productivity, foreign direct investment and economic growth: Evidence from OECD countries. Journal of Business and Management Sciences, 1(6), 133-138.

Boghean, Carmen, and Mihaela State. 2015. The relation between foreign direct investments (FDI) and labour productivity in the European Union countries. Procedia Economics and Finance, 32, 278-285.

Borensztein, Eduardo, José De Gregorio, and Jong-W. Lee. 1998. How does foreign direct investment affect economic growth? Journal of international Economics, 45(1), 115-135.

Carkovic, Maria, and Ross Levine. 2005. Does foreign direct investment accelerate economic growth? Does foreign direct investment promote development, 195, and 220?

Cheng, Leonard K., and Yum K. Kwan. 2000. What are the determinants of the location of foreign direct investment? The Chinese experience. Journal of international economics, 51(2), 379-400.

Dang, Van C., and Quang K. Nguyen. 2021. Determinants of FDI attractiveness: Evidence from ASEAN-7 countries. Cogent Social Sciences, 7(1), 2004676.

De Mello Jr, Luiz R. 1997. Foreign direct investment in developing countries and growth: A selective survey. The journal of development studies, 34(1), 1-34.

De Mello Jr, Luiz R. 1999. Foreign direct investment-led growth: evidence from time series and panel data. Oxford economic papers, 51(1), 133-151.

Dimelis, Sophia P., and Sotiris K. Papaioannou. 2010. FDI and ICT effects on productivity growth: A comparative analysis of developing and developed countries. The European Journal of Development Research, 22, 79-96.

Hale, Galina, and Mingzhi Xu. 2016. FDI effects on the labor market of host countries. Federal Reserve Bank of San Francisco Working Paper, 2016-25.

Qiu, Bin, Shuai Yang, Peijiang Xin, and Berna Kirkulak. 2009. FDI technology spillover and the productivity growth of China’s manufacturing sector. Frontiers of Economics in China, 4, 209-227.

Vijayakumar, Narayanamurthy, Peruma Sridharan, and K. C. S. Rao. 2010. Determinants of FDI in BRICS Countries: A panel analysis. International Journal of Business Science & Applied Management (IJBSAM), 5(3), 1-13.

Wang, Yanling. 2010. FDI and productivity growth: the role of inter‐industry linkages. Canadian Journal of Economics/Revue canadienne d'économique, 43(4), 1243-1272.

Zhao, Zhongxiu, and Kevin H. Zhang. 2010. FDI and industrial productivity in China: Evidence from panel data in 2001–06. Review of Development Economics, 14(3), 656-665.

Deng, Huihui, and Baichuan Sang. 2015. Fiscal Decentralization, Environmental regulation and FDI Competition among Local Governments. Journal of Shanghai University of Finance and Economics, 17(3), 79-88.

Dong, Xiangshu, Yuanyuan Wei, and Xiang Xiao. 2022. Fiscal Decentralization, FDI, and Technological Innovations. Statistics and Decision, 38(23), 148-153.

Li, Bin, Yuan Qi, and Qian Li. 2016. Fiscal Decentralization, FDI and Green Total Factor Productivity—An Empirical Test Based on Panel Data Dynamic GMM Method. Journal of International Trade, (7), 119-129.

Liang, Qiang. 2019. FDI, FDI, Fiscal Decentralization and Regional Technological Innovation. East China Economics Management, 33(5), 43-49.

Shang, Jianchu, Fangzhi Fan, and Jian Zhou. 2005. An Empirical Study on the Impact of Foreign Direct Investment on Industrial Labor Productivity in China. Statistics and Decision (2), 76-78.

Sun, Puyang, Shuai Han, and Qiqin Xu. 2013. The Dynamic Impact of Industry Cluster on Labor Productivity. The Journal of World Economy, (3), 33-53.

Tang, Dongbo. 2014. Vertical Specialization and Labor Productivity: A Globalization Perspective. The Journal of World Economy, (11), 25-52.

Xin, Yongrong, Qi Chen, and Junzhe Xiao. 2009. The Impact of FDI on Cost Advantage of Labor Force in Chinese Manufacturing Industry—Analysis Based on Labor Productivity. Studies in Science of Science), 27(1), 74-79.

Yang, Xiaoli, and Xing Zhang. 2011. Local Governments’ Competition for FDI under China’s Decentralization and Its Influence on Technology Spillovers. Journal of Zhejiang Gongshang University, (2), 37-44.

Zhu, Xiaoming, and Jinbo Liu. 2003. An Empirical Study on the Effect of Foreign Direct Investment on Labor Productivity in China. Shanghai Management Science, (2), 4-5.

Downloads

Published

22-01-2024

How to Cite

He, J. (2024). The Impact of FDI on Labor Productivity in China: Evidence from Panel Data 2003-2020——A Study on Fiscal Decentralization as a moderating variable. Highlights in Business, Economics and Management, 24, 2648-2658. https://doi.org/10.54097/zrmnhm09