Does the industrial relations in host country affect FDI?

Abstract

Using regression models, the paper analyses the relationship between Chinese industrial relations and foreign direct investment using data from 1985 to 2008 in China. The testing results show: since China's industrial relations system is not sound and trade union strength is weak, foreign direct investment was affected weakly by the variables of industrial relations and trade union in china. Therefore notable variables influenced foreign direct investments are still such several traditional factors, such as GDP, wage and the policy. But it can be expected, industrial relation will make much impact on foreign direct investment along with setting a standard and stable operating mechanism for China's labor relations, strengthening the power of union and centralized collective bargaining.