Bring Your Own Workers: Chinese OFDI, Chinese overseas workers, and collective labor rights in Africa

Abstract

Chinese multinational corporations (MNCs) in Africa are often criticized for hiring Chinese expatriates at the expense of native workers. This raises the possibility that Chinese MNCs, unlike most non-Chinese MNCs, fail to contribute to local employment or the skill improvement of native workers. In reality, the extent to which Chinese firms increase the number of expatriate workers varies widely across host countries. When does Chinese FDI increase the number of Chinese expatriate workers in a host country? Do Chinese MNCs rely more heavily on expatriate workers than do MNCs from other countries? To answer these questions, I conduct a cross-national analysis of a panel dataset of Chinese workers in 49 African host countries from 2000 to 2018. This study finds that Chinese FDI only increases the number of Chinese workers in host countries with weaker collective labor rights. In host countries featuring stronger collective labor rights, Chinese FDI does not increase the number of Chinese expatriate workers. The firm-level analysis of the African Investor Survey of 2010 also shows that Chinese MNCs hire more non-native workers than do non-Chinese MNCs only when investing in countries with weaker collective labor rights. These findings highlight the role of host countries’ institutions in conditioning the impact of FDI.