Research On The Influence Of China’s Labor Productivity On Foreign Direct Investment

The causal relationship between foreign direct investment and labor productivity has long been a consensus in academic circles.Many years of research have revealed the impact of foreign direct investment on labor productivity.However,the retroaction of labor productivity on foreign direct investment needs to be further explored,which has high academic value.This paper takes China’s labor productivity and foreign direct investment as the research object,based on the relevant theories of international investment,uses the provincial panel data of China from 2009 to 2019,and reveals the impact of labor productivity on foreign direct investment through fixed effect model.Research shows that:(1)China’s labor productivity has a positive role in promoting foreign direct investment.Labor productivity will increase by 1 percentage point,and the scale of foreign investment will increase by 1.994 percentage points.(2)The impact of labor productivity on FDI in China has significant regional differences.The increase in labor productivity in the eastern,central and northeastern regions has attracted foreign direct investment.Although the western region has the advantage of labor cost,its low labor productivity cannot meet the requirements of foreign-funded enterprises and has become a depression for foreign investment.This paper demonstrates the mechanism of labor productivity on foreign direct investment by means of deductive reasoning and empirical test,which can be used for reference by other scholars.At the same time,it provides a reference for the foreign trade department of the Ministry of Commerce to guide foreign investment,formulate relevant policies on foreign direct investment and attract foreign investment by local foreign trade departments.