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Human Capital and International Capital Flows: Evidence from China

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  • Zhenshan Yang
  • Yinghao Pan
  • Dongqi Sun
  • Li Ma

Abstract

The pattern of international capital flows has changed dramatically in the process of globalization. In this study, we argue that human capital (HC) facilitates a region’s reversal from being a net recipient of external resources to being an active contributor in the global market. Using a panel vector autoregressive regression method, we examine the relationships among regional HC, foreign direct investment (FDI), and outward FDI during 2004–2015 in China. Our results show that HC plays a key role in both attracting FDI and generating outward FDI. The findings contribute to research on the dynamic capacity building of regions participating in the global economy, especially strengthening HC for local economies participating in the global economy as either investment recipients or contributors.

Suggested Citation

  • Zhenshan Yang & Yinghao Pan & Dongqi Sun & Li Ma, 2022. "Human Capital and International Capital Flows: Evidence from China," International Regional Science Review, , vol. 45(1), pages 74-107, January.
    • Handle: RePEc:sae:inrsre:v:45:y:2022:i:1:p:74-107
    DOI: 10.1177/0160017621989421
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    2. Zherui Li & Feng Zhen & Wei Liu, 2024. "Exploring the spatial pattern and influencing factors of intercity capital flows from 2005 to 2019: A case study of Yangtze River Delta region, China," Growth and Change, Wiley Blackwell, vol. 55(1), March.
    3. Nguyen, Giang & Nguyen, My & Pham, Anh Viet & Pham, Man Duy (Marty), 2023. "Navigating investment decisions with social connectedness: Implications for venture capital," Journal of Banking & Finance, Elsevier, vol. 155(C).
    4. Can Cheng & Xiuwen Yu & Heng Hu & Zitian Su & Shangfeng Zhang, 2022. "Measurement of China’s Green Total Factor Productivity Introducing Human Capital Composition," IJERPH, MDPI, vol. 19(20), pages 1-19, October.

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