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<p>This study draws on neoclassical economic models, resource reallocation mechanisms, comparative advantage theory, and related frameworks to examine the effects of foreign direct investment (FDI) and exports on employment during China’s economic transformation. Using provincial panel data from 2008 to 2022 and a dynamic panel data model, the results reveal that employment exhibits strong path dependence, with lagged employment, FDI, GDP, and fixed asset investment exerting positive effects at the nationwide level. Consistent with neoclassical and resource reallocation perspectives, FDI exerts a positive effect on employment by channeling capital into productive sectors and enhancing overall efficiency. By contrast, aligned with comparative advantage and new economic geography theories, export growth reduces employment in certain regions by concentrating production and shifting output toward capital- and technology-intensive sectors, thereby lowering labor demand, particularly among lower-skilled workers. The regional analysis indicates that FDI fosters employment across eastern, central, and western China, while GDP contributes to job growth in eastern and western China. By contrast, exports are associated with employment declines in the eastern and western regions, highlighting the uneven distribution of gains from trade integration. These findings underscore the importance of targeted policies that enhance the employment effects of FDI, while mitigating export-related vulnerabilities by promoting labor market resilience, industrial diversification, and workforce adaptability.</p>

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The Impact of Foreign Direct investment and exports on China’s employment

  • 期刊论文

  • 发表日期：

    2026年4月27日

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  • Xuchong YAN

摘要

This study draws on neoclassical economic models, resource reallocation mechanisms, comparative advantage theory, and related frameworks to examine the effects of foreign direct investment (FDI) and exports on employment during China’s economic transformation. Using provincial panel data from 2008 to 2022 and a dynamic panel data model, the results reveal that employment exhibits strong path dependence, with lagged employment, FDI, GDP, and fixed asset investment exerting positive effects at the nationwide level. Consistent with neoclassical and resource reallocation perspectives, FDI exerts a positive effect on employment by channeling capital into productive sectors and enhancing overall efficiency. By contrast, aligned with comparative advantage and new economic geography theories, export growth reduces employment in certain regions by concentrating production and shifting output toward capital- and technology-intensive sectors, thereby lowering labor demand, particularly among lower-skilled workers. The regional analysis indicates that FDI fosters employment across eastern, central, and western China, while GDP contributes to job growth in eastern and western China. By contrast, exports are associated with employment declines in the eastern and western regions, highlighting the uneven distribution of gains from trade integration. These findings underscore the importance of targeted policies that enhance the employment effects of FDI, while mitigating export-related vulnerabilities by promoting labor market resilience, industrial diversification, and workforce adaptability.