- Elgar original reference
Edited by Craig C. Julian, Zafar U. Ahmed and Junqian Xu
Chapter 13: The home-country employment effect of transnational corporations' (TNCs) FDI in China
Huiqun Liu and Jinyong Lu
The issue of the home country effects of foreign direct investment (FDI) has reappeared in a new form. Until recently, most outward foreign direct investment (OFDI) was originated with firms based in developed countries. However, the growing importance of OFDI from the Asian emerging economies and new EU member states in Central and Eastern Europe has made it necessary to analyze the impact of OFDI on the parent firms in these countries, including, more broadly, the impact OFDI has on their home economies. This chapter looks at the impact of outward investments on employment in the home country. The impact on employment has been one of the most critical issues for policy makers and labor organizations in developed countries for some time. The public is very sensitive about the risk of losing jobs to the target countries of outward investments. However, the overall effect of outward investments originating from developing countries could be quite different. Consequently, their impact on employment may be different as well. The push and pull factors of outward investments from developing countries are not the same as for investments from developed countries. Relatively speaking, much less FDI flows from developing countries to developed countries and their major target countries are the ones with lower levels of economic development (Svetlicic and Jaklic 2003). Since there are few cases that could be studied in the case of FDI from developing countries, the labor costs of the host and home countries are quite comparable.
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