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Foreign Direct Investment and Skill Formation in China

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  • Bharati Basu
  • Jianfeng Yao

Abstract

Using panel data analyses, this paper examines the relation between human capital formation and Foreign Direct Investment (FDI) in China. It shows that FDI has a significant effect on human capital formation, at least for the period 1995-2001. When we estimate the relationship between FDI and skill formation for the coastal and non-coastal provinces separately, the positive relationship is maintained, and this relationship also holds when we consider investment in real estate or the ratio of number of foreign firms to total number of firms investing in China. The results stand robust in the causality test and the sensitivity analysis.

Suggested Citation

  • Bharati Basu & Jianfeng Yao, 2009. "Foreign Direct Investment and Skill Formation in China," International Economic Journal, Taylor & Francis Journals, vol. 23(2), pages 163-179.
    • Handle: RePEc:taf:intecj:v:23:y:2009:i:2:p:163-179
    DOI: 10.1080/10168730902901106
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    Cited by:

    1. Veasna Kheng & Sizhong Sun & Sajid Anwar, 2017. "Foreign direct investment and human capital in developing countries: a panel data approach," Economic Change and Restructuring, Springer, vol. 50(4), pages 341-365, November.
    2. Hassan Fereidouni Gholipour & Usama Al-mulali & Abdul Hakim Mohammed, 2014. "Foreign investments in real estate, economic growth and property prices: evidence from OECD countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 17(1), pages 33-45, March.

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    Keywords

    China; FDI and skill formation;

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