FDI, Human Capital And The Relative Poverty Of Cities In Eastern And Central China

Since the 80's of last century,many parts of the world(Eastern and Western Europe,the United States,Latin America)has emerged a new type of poverty.The new poverty mainly refers to that poverty due to economic system reformation,economic restructuring process,the original economic order has been impacted,causing part of the none?poor citizen slide into poverty situation.Since 1997,our country began to carry out the radical economic reform,resulting in a large number of unemployed population,if there isn't proper placement it will lead to serious urban poverty.Moreover the welfare system reform which accompany of economic reform abolished many kinds of free welfare thereby worsening the situation of low?income people,deepen the degree of urban poverty.After market economy implement,a large number of rural workers rush into urban employment,due to the institutional discrimination and there lack of human capital rural workers can easily become a new poverty group in the city,increasing the number of urban poor population.Earlier China has put forward the "knowledge economy" strategy,after joining the WTO,China has positively changed the policy of foreign investment,and recently,it has put forward the concept of inclusive development and new urbanization.Under this background,this paper explores the effects of FDI and human capital on urban relative poverty,and puts forward some policy suggestions on the development of FDI and human capital.First of all,the paper introduces the background of the new urban poverty in our country and abroad,describes the latest progress of the research on urban poverty in China and foreign countries,and illustrates the innovation and deficiency of the article.In the subsequent introduces ridge regression method,and use this method to do the empirical analysis measuring the influence of FDI and human capital on city's relative poverty level.In the meantime FDI and human capital are separately represented by the index of the ratio of low income group's income accounting for the total income of all the residents,and the ratio of FDI accounting for the total amount of capital formation that year.Human capital are represented by average years of schooling.Based on the data of 100 sets of 10 provinces in East and Central era 2004?2013,the paper makes an empirical analysis of the effect of FDI and human capital with ridge regression method.In order to explore whether the effect of FDI and human capital differences in different times and regions,this article first uses dummy variable method found the existence of temporal and regional differences of variables impact on the relative poverty.For further discussion of the variables in different time and in different era,the overall panel data is cut into four parts by the dimensions of the time and area segmentation,eastern provinces from 2004 to 2008 and 2009?2013,Central provinces from 2004 to 2008 and 2009?2013 four parts.The results shows that,in the eastern region before 2008,FDIs effect on the urban poverty is to worsen it,after 2009 the deterioration effect is lessened,human capitals effect is not significant before 2008,after 2009 it shows deterioration to poverty.In the central region the effect of FDI is not significant before 2008,and become relieving effect after 2009.Human capital has a worsen effect before 2008,after 2009 it become relieving effect but not so statistic significant.Then,according to the results of the empirical study,this paper makes the following explanations.In terms of foreign investment: eastern region in recent years the upgrading of FDI structure caused high technical personnel income rose,so impact deteriorating effect on the regional income disparity and relatively poverty,with the arrival of Lewis turning point,FDIs labor?intensive enterprises demand of ordinary labor rises up to pulling there wage up,so the FDIs deteriorating effect on urban poverty in eastern era weakened;central region in recent years,FDI is still to investment mainly of labor intensive industry,so FDI in the central region presents relieving effect on urban poverty,this effect is strengthened by the market environment improvement.In the aspect of human capital: eastern region in the past 10 year's total human capital increased to worsen relative poverty.The reason is that the eastern era is more a market economy,the obtain of education resources is more depend on market therefore improving the beneficiaries of the total human capital is mainly benefiting dominant class in the market,enhancing human capital expanded income gap,worsened the condition of relative poverty.Central area total human capital first large and then narrowed the income gap,this is due to weak policy implementation,at the beginning of the implementation of compulsory education,compulsory education popularity is not enough,only some people benefit;with the development of the economy and opening of people's thinking,compulsory education has been more popular,everyone's human capital have been improved,so improve the average level of human capital first increased and then reduce the income gap.This paper also explains the effects of several variables on the relative poverty other than the two main variables.Finally,according to the difference situation of the East and central regions,this paper gives the policy suggestions.The eastern region should change the FDI structure,enhance the fairness of education,strengthen the interaction between human capital and foreign investment,encourage the development of the third industry,and increase social security foundation.Central region should enhance the introduction of foreign investment,take efforts to strengthen vocational education,adjust the income distribution of the third industry,reform social security work.