Exports, Foreign Direct Investment and Employment: The Case of China
Xiaolan Fu and
The World Economy, 2005, vol. 28, issue 4, 607-625
This paper analyses the growth of production and employment in China during the period 1978 to the early 1990s. It argues that the Chinese experience with export-led growth provides an excellent case study of the phenomenon of a vent for surplus resources provided by exports, identified by Adam Smith in the Wealth of Nations and elaborated by Hla Myint. The paper extends the Smith-Myint model of 'vent-for-surplus' productive capacity to 'vent-for-surplus' resources by allowing for foreign investment flows. The 'vent-for-surplus' effect of exports on employment and growth is examined in a dynamic labour demand framework for a panel of township and village enterprises (TVEs) in China. Copyright Blackwell Publishing Ltd 2005.
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