Title：FTAs, Chinese Imports, and Employment in Developing Countries — Evidence from the China-Chile FTA

Authors：Hao Wei, Qiyangfan Feng

Abstract：Expanding a global network of high-standard free trade agreements is an important measure for countries to promote high-level opening up. Taking the China-Chile FTA as a case, this paper systematically studies the impact of free trade agreements with China on employment in enterprises of developing countries by using firm-level data from Chile. The results of this paper show that the expansion of Chinese imports as a result of the implementation of the China-Chile FTA significantly increased employment in Chilean enterprises. The expansion of Chinese imports raised the employment scale of Chilean firms through mechanisms such as production scale effect, institutional cost effect, and industrial chain effect. Additionally, the mechanisms of the reduction in non-trade institutional cost and the industrial chain effect notably promoted the growth of employment in Chilean firms focused on domestic sales. The expansion of Chinese imports not only boosted employment in skilled labor, but also increased the proportion of female labor in Chilean firms. Furthermore, the reduction in non-tariff trade barriers induced by the China-Chile FTA significantly enhanced the employment scale of export-oriented Chilean enterprises. When considering both of the effects of China’s export and import expansion, the China-Chile FTA also had a significant positive impact on employment in Chilean firms. This paper concludes that expanding China’s free trade areas network is conducive to boosting global employment, and that active participation by developing countries in China’s FTAs is a rational strategic choice.

Keywords：Free Trade Agreements (FTAs), Chinese Imports, Enterprise Employment, Non-tariff Trade Barriers, Trade Institutional Costs