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An Empirical Study On The Relationship Among FDI,Human Capital And Economic Growth

Posted on:2018-07-08Degree:MasterType:Thesis
Country:ChinaCandidate:A N XieFull Text:PDF
GTID:2417330542998363Subject:International business
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The scale of Foreign Direct Investment(FDI)reached a new high point since 2015 in China.There are setting up 26575 foreign-funded enterprises with a growth rate of 11.8%yearly,while the real amount of foreign capital is$126.27 billion with a growth rate of 6.4%yearly.China is ranked as the third-biggest destination of FDI inflows in the world,where the top 500 multinational enterprises are active in investment and capital increase.FDI can promote the optimizing of industrial structure and technology transfer as well as increasing employment opportunities.These advantages have been widely acknowledged.However,these advantages have to be based on human capital.The scale and quality of FDI are determined by the level of human capital in China.Modern economic theory has demonstrated that human capital is a decisive factor in promoting the long-term economic growth.It is an unprecedented opportunity for the development of Fujian province to establish Fujian Free Trade Zone with the rapid construction of the western strait economic zone.The next five years,it is a key period for Fujian province to transform the economic growth pattern,to achieve scientific sustainable development,and to optimize human resource.Therefore,it is necessary to study on the relationship among FDI,human capital and economic growth of Fujian province.How to evaluate the economic effect of introducing FDI,what kind of investment climate is needed to attract FDI with high added-value and how to provide a good institutional environment to promote the spillover effect of FDI in the 'New Normal' economy.This paper will be deeply analysis the relationship among the FDI,human capital and economic growth in Fujian province.A literature review clearly indicates that the domestic and foreign experts mainly focused on the relationship between FDI and economic growth,human capital and economic growth,the spillover effect of FDI and economic growth etc.There is a relative lack of researches on the relationship of FDI,human capital and economic growth and even less researches being done for Fujian province.In this article,an attempt is made to critically examine relationships of FDI,human capital and economic growth,especially with reference to economic development in Fujian province.It systematically measures spillovers effect of FDI using the method of unit root test,cointegration test and Granger causality over the period 1993-2015 in Fujian province.The time series economic model will also be established to explore the relationship of FDI,human capital and economic growth of Fujian province.The result shows that there is a long-term stable equilibrium relationship among FDI,human capital and the economy growth in Fujian province.The economy growth in Fujian province can be promoted by the combined effect between the inflows of FDI and the increase of human capital stock.The development of human capital,whether short-term or long-term,can boost the economy growth in Fujian province while on the FDI inflows,only the short-term one can play a positive role.The short-term human capital have a positive effect on the FDI inflows while the long-term one have a negative effect.In order to motivate the economy to increase sustainably in a reasonable and effective way to use the internal relationship of FDI,human capital and economy growth,Fujian province must take actions in improving the investment climate,correctly guiding the direction of FDI flows,broadening the channels of capital introduction,improving the quality of capital introduction,narrowing the gap between urban and rural education and enhancing the penetration of secondary education.
Keywords/Search Tags:foreign direct investment, human capital, economic growth
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