Does Foreign Direct Investment Catalyze Local Structural Transformation and Human Capital Accumulation ? Evidence from China
This paper examines the effect of foreign direct investment on local structural transformation and human capital accumulation in China, exploiting variations in foreign direct investment inflows across manufacturing sub-sectors caused by China’s fo...
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| Format: | Working Paper |
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Washington, DC: World Bank
2022
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| Online Access: | http://documents.worldbank.org/curated/en/943921646335623928/Does-Foreign-Direct-Investment-Catalyze-Local-Structural-Transformation-and-Human-Capital-Accumulation-Evidence-from-China http://hdl.handle.net/10986/37104 |
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okr-10986-371042022-03-10T05:10:47Z Does Foreign Direct Investment Catalyze Local Structural Transformation and Human Capital Accumulation ? Evidence from China Liu, Yan MANUFACTURING INDUSTRY GLOBAL PRODUCTION NETWORK URBAN UNEMPLOYMENT SECTORAL COMPOSITION AGREEMENT ON TRADE-RELATED INVESTMENT FOREIGN DIRECT INVESTMENT This paper examines the effect of foreign direct investment on local structural transformation and human capital accumulation in China, exploiting variations in foreign direct investment inflows across manufacturing sub-sectors caused by China’s foreign direct investment deregulation and initial sectoral composition patterns across China’s cities and provinces. Using a panel of city-level data from 1990 to 2005, the paper shows that manufacturing foreign direct investment inflows greatly accelerated city-level structural transformation and human capital accumulation. By expanding access to the global market, foreign direct investment created a huge pull factor that drew excess labor away from farms into factories and services. Foreign direct investment has promoted high school and university enrollment by paying a higher wage premium for skilled workers and pushing up the skill premium. The positive effect on structural transformation is largely driven by export-oriented foreign direct investment, while market-seeking foreign direct investment has a much larger effect on college enrollment. High-skill foreign direct investment has a larger effect on college enrollment than low-skill foreign direct investment. 2022-03-09T18:35:30Z 2022-03-09T18:35:30Z 2022-03-03 Working Paper http://documents.worldbank.org/curated/en/943921646335623928/Does-Foreign-Direct-Investment-Catalyze-Local-Structural-Transformation-and-Human-Capital-Accumulation-Evidence-from-China http://hdl.handle.net/10986/37104 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC: World Bank Policy Research Working Paper Publications & Research East Asia and Pacific China |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
MANUFACTURING INDUSTRY GLOBAL PRODUCTION NETWORK URBAN UNEMPLOYMENT SECTORAL COMPOSITION AGREEMENT ON TRADE-RELATED INVESTMENT FOREIGN DIRECT INVESTMENT |
| spellingShingle |
MANUFACTURING INDUSTRY GLOBAL PRODUCTION NETWORK URBAN UNEMPLOYMENT SECTORAL COMPOSITION AGREEMENT ON TRADE-RELATED INVESTMENT FOREIGN DIRECT INVESTMENT Liu, Yan Does Foreign Direct Investment Catalyze Local Structural Transformation and Human Capital Accumulation ? Evidence from China |
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East Asia and Pacific China |
| description |
This paper examines the effect of
foreign direct investment on local structural transformation
and human capital accumulation in China, exploiting
variations in foreign direct investment inflows across
manufacturing sub-sectors caused by China’s foreign direct
investment deregulation and initial sectoral composition
patterns across China’s cities and provinces. Using a panel
of city-level data from 1990 to 2005, the paper shows that
manufacturing foreign direct investment inflows greatly
accelerated city-level structural transformation and human
capital accumulation. By expanding access to the global
market, foreign direct investment created a huge pull factor
that drew excess labor away from farms into factories and
services. Foreign direct investment has promoted high school
and university enrollment by paying a higher wage premium
for skilled workers and pushing up the skill premium. The
positive effect on structural transformation is largely
driven by export-oriented foreign direct investment, while
market-seeking foreign direct investment has a much larger
effect on college enrollment. High-skill foreign direct
investment has a larger effect on college enrollment than
low-skill foreign direct investment. |
| format |
Working Paper |
| author |
Liu, Yan |
| author_facet |
Liu, Yan |
| author_sort |
Liu, Yan |
| title |
Does Foreign Direct Investment Catalyze Local Structural Transformation and Human Capital Accumulation ? Evidence from China |
| title_short |
Does Foreign Direct Investment Catalyze Local Structural Transformation and Human Capital Accumulation ? Evidence from China |
| title_full |
Does Foreign Direct Investment Catalyze Local Structural Transformation and Human Capital Accumulation ? Evidence from China |
| title_fullStr |
Does Foreign Direct Investment Catalyze Local Structural Transformation and Human Capital Accumulation ? Evidence from China |
| title_full_unstemmed |
Does Foreign Direct Investment Catalyze Local Structural Transformation and Human Capital Accumulation ? Evidence from China |
| title_sort |
does foreign direct investment catalyze local structural transformation and human capital accumulation ? evidence from china |
| publisher |
Washington, DC: World Bank |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/en/943921646335623928/Does-Foreign-Direct-Investment-Catalyze-Local-Structural-Transformation-and-Human-Capital-Accumulation-Evidence-from-China http://hdl.handle.net/10986/37104 |
| _version_ |
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