Yujeong Yang - Racing to the Bottom The Effect of Chinese Foreign Direct Investment on Collective Labor Rights

Does foreign direct investment improve collective labor rights in host countries? Studies have discussed how FDI originated from developed democracies may improve collective labor rights in host countries. What we don’t know is whether this positive effect of FDI on labor rights is present when FDI originates from developing economies with oppressive labor conditions. The rapid rise of China as a source of outward FDI provides an opportunity to examine this question. Using a time-series cross-sectional dataset covering 109 countries from 2005 to 2018, I examine how Chinese outward FDI influences the collective labor rights of host countries in both developing and developed regions and whether the effect of Chinese FDI differs from that of FDI from developed democracies. I find that FDI inflow from China is significantly associated with a decline in collective labor rights in host countries, while non-Chinese FDI inflow does not have such a negative effect.