The Lessons From-Lucas Paradox-Human Capital And Distribution Of FDI In China

In recent years, China made big progress in absorbing foreign direct investment, but the distribution of foreign direct investment between different regions were extremely uneven, this phenomenon is according with the forecast of Lucas Paradox. This essay on the base of Lucas Paradox and combined with the situation of China, deduced the Lucas Paradox model of china, and adopted the Granger causality test analysis and panel data analysis on the research of the inter-relationship between human capital and FDI distribution, at last, put forward the policy recommendations, in order to balanced the distribution of foreign direct investment, expand the scale of foreign investment so as to promoted the rapid growth of economic.This essay approached with three factors include differences in human capital,Spillover of human capital and the imperfect of capital markets to explain Lucas Paradox, under the condition of analysis and review the theory of Predecessors, combined mathematical model to analyzed the impact of different factors to explained the Lucas Paradox ,and made point of human capital to explain the phenomenon of Lucas Paradox in china.Through analysis the present situation and development of China's foreign direct investment and human capital distribution, we found that in spite of we has made remarkable achievements in absorbing foreign direct investment, but the distribution of foreign investment were uneven between the regions, showing that scarce in the west and rich in the east, and human capital also showing as the situation, in adopting the elements flow model to analyze intrinsic mechanism between human capital and FDI distribution, we discovered that human capital is one of the important factors to impact the distribution of FDI ,and the conclusion of Granger causality test also show the interaction between human capital and FDI distribution, which further verified the results of the theory.Finally, we according with the result of theoretical analysis and empirical research ,combined with the actual situation of China and proposed a series of political recommendations to attracting foreign direct investment and promote the coordinated development of regional economy ,which main include raise the level of human capital, improving investment environment in mid-western part of china.