The level of human capital in innovative firms located in China. Is foreign capital relevant?
AbstractStudies on the impact of Foreign Direct Investment (FDI) on the Chinese economy have essentially focused on the relationship between FDI, productivity and economic growth, revealing a tendency toward sectoral and macroeconomic empirical studies. This work aims to complement these approaches and contribute to the rather limited literature on the relationship between FDI, Human Capital and Innovation at a corporate level. Based on a set of large and innovative firms (national and foreign capital) located in China, we have concluded that: i) the direct impact of foreign capital on the level of human capital in firms is negative, that is, no evidence was found suggesting that FDI has a positive influence on their human capital; ii) in indirect terms, by means of investment in R&D activities, FDI has a positive impact on general human capital (i.e., formal education). These results suggest that for China to benefit from FDI, it is necessary to implement a selective policy to attract FDI, taking into account more technologically advanced projects.
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Bibliographic InfoPaper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 391.
Length: 22 pages
Date of creation: Nov 2010
Date of revision:
Foreign Direct Investment; Multinational firms; Human Capital; R&D; China;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-27 (All new papers)
- NEP-CSE-2010-11-27 (Economics of Strategic Management)
- NEP-CWA-2010-11-27 (Central & Western Asia)
- NEP-HRM-2010-11-27 (Human Capital & Human Resource Management)
- NEP-INO-2010-11-27 (Innovation)
- NEP-SBM-2010-11-27 (Small Business Management)
- NEP-TRA-2010-11-27 (Transition Economics)
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