The Poverty Reduction Effect of China’s Special Economic Zones—Case Study of Shenzhen

Abstract

There are three kinds of controversial views on the income distribution effect of FDI: the introduction of FDI widens the gap among different regions and the income gap of residents, thus being not conducive to poverty reduction; FDI is conducive to narrowing the gap between the rich and the poor and reducing poverty; and FDI has uncertain effects on income distribution, which are related to the quality of FDI, developmental stage and market environment. This paper conducts a case study of the Shenzhen Special Economic Zone for investigating the effects of the introduction of FDI on the employment of the poor population at the developmental stages of different industries and further exploring the poverty reduction effect of FDI. The results of the empirical analysis show that the FDI industries in different developmental periods are characterized by the changes from labor-intensive to capital- and technology-intensive. In this process, their effect on the employment of the low-income labor force has declined and the function of comprehensive poverty reduction has weakened.