Human Capital and Technological Spillovers from FDI in the Chinese Regions: A Threshold Approach

Abstract

Openness is a well-known factor that facilitates the development of a country. Investment from developed to less developed countries are the major channel for realizing this process. Besides the direct effects of investing, foreign direct investment (FDI) brings technology spillover effects to domestic firms. Kokko et al. (1996) and Blomstrom and Kokko (1997) find empirical evidence for FDI technology spillovers. Some authors also discus absorptive capacity for technology spillovers determined by human capital and technology gaps. Nelson and Phelps (1966) argue that education speeds technological diffusion and that technological progress is an increasing function of educational attainment and proportional to the gap between the theoretical level of technology and the level of technology in practice. Keller (1996) suggests that technological information is distributed freely, but the technologies cannot be utilized unless the accumulated human capital reaches a higher level. Eaton and Kortum (1996) also emphasize the importance of human capital in the absorption of internal and international knowledge transfers.KeywordsHuman CapitalForeign Direct InvestmentCapital StockTotal Factor ProductivityAbsorptive CapacityThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.