Fdi Affect Our Human Capital Formation Mechanism Of Action Studies

The economic growth is the core issue of a country for its economic development, and the solutions of a good many issues of economic development like the optimization of economic structure, improvement of people's lives quality and the development of science and technologyl as well as culture, etc., all depend on the lasting economic growth of a country. Endogenous economic growth theory holds technical advancement (or knowledge accumulation) and human capital are the decisive factors to promote the sustainable growth of economy, in which, human capital is regarded as the most important source of economic growth under the conditions of open economy. Investing on human capital is the most fundamental approach to form human capital, and one of the important problems in our country's human capital formation is lacking the inducements to human capital investment.Since the seventies of the 20th century, especially with the acceleration of the economic globalization since the year of 1990, multinational corporations (hereafter referred to as MNCs) have become the entities of technology innovation, possession, and usage with their strong technical advantages, rich capital foundation, abundant knowledge storage, and they are the main force of promoting the development of the world economy, while the foreign direct investment (abbreviated as FDI) and the international trade of which they are the entities are the most important carriers of technology transfer. FDI does not only bring capitals, advanced technologies and management elements, but accelerate the process of the labor market of the host country to gradually progress to the higher level of equilibrium, thus promotes the upgrading of labor's skill of the host country. Today, with our country's introduction of FDI increasing continuously, we should especially pay attention to the promoting functions of FDI on our country's human capital formation, which will directly affect the quality and benefit assessment of FDI after it is introduced.Based on the analysis on our country's practice in utilizing FDI, this dissertation established an intact theoretical analysis frame, incorporating FDI, income einequality and human capital formation, analysed the inner links and function mechanism among them in depth. The skill-biased FDI introduced into our country will directly increase the demands for high skilled labor when recruiting the staff, and the technical spillovers of the skill-biased FDI in our country's corporations will also accelerate the improvement of the production technology level of our country's corporations, and enable the technical progress of our country's corporations to demonstrate skill-biased features inevitably, thus increase the demands for high skilled labor. Our country's supply of labor bears the typical "Dualistic Structuret" characteristics, namely, coexistence of the nearly limitless supply of low skilled labor and relatively rare supply of high skilled labor, so the introduction of FDI will enhance the wage level of high skilled labor; while because of the massive surplus of our country's low skilled labor, the introduction of foreign funded corporations will impose almost no influence on the wage level of low skilled labor. Therefore the phenomenon like the income inequality between the high skilled labor and low skilled labor is resulted in, and the increase of relative wage level will result in the increase of the rate of return from individual investment in education, thus FDI imposes strong inducing function on the human capital investment, excites the human capital investment, prolongs the period of people's human capital investment, and finally promotes the human capital formation. Meanwhile, the demand of FDI for high skilled labor also furtherly promotes the skilled workers and professional talents to accumulate in the concentrated areas of FDI. That will contain the ubiquitous phenomenon of "Intelligence Outflow" in the developing countries to a certain extent, and may even procure the "Intelligence Return", in addition, the continuous inflow of FDI is also accompanied with the return of overseas talents, all of which will help to improve the structural state of our country's human capital.On the basis of theoretical analysis, this dissertation verified the time series data through Granger test of causality. The conclusion of Granger test of causality are: 1. there is evident unidirectional causality between our country's overall human capital and FDI, namely, the overall human capital is the Granger cause of FDI, but FDI is not that of our country's overall human capital, which is identical to our country's realities and the theoretical analysis of this dissertation; 2. the relation between our country's low skilled human capital and FDI is unidirectional causality too, namely, low skilled human capital is the Granger cause of FDI, but FDI is not that of our country's low skilled human capital; 3. FDI is the Granger cause of our country's high skilled human capital, but the high skilled human capital is not that of FDI.Meanwhile, the regression result of the dynamic panel data models also indicates that FDI imposes evident promoting effect on the formation of our country's overall human capital, concretely, as to the different levels of human capital, FDI promoted the formation of our country's high skilled human capital, while imposed no evident promoting function on the formation of our country's low skilled human capital.On the basis of empirical study, this dissertation proposed the policy frame of our country utilizing FDI from the angle of human capital: improving our country's overall level of human capital depending on education; utilizing the exploiting effect of FDI on our country's human capital; absorbing skill-biased FDI; encouraging the multinational corporations to carry out researching and training activities in our country; creating more optimized conditions to promote talent return and attract the overseas talents to the condition optimized even more, promote talent's return, attract overseas talents to obtain employment and start an undertaking back in their motherland.