The Effects of FDI and Human Capital on Chinese Economic Growth

The purpose of our empirical tests is to estimate the effect on Chinese economic growth of interaction of human capital with FDI, and to investigate the channel through which FDI may be beneficial for growth. The empirical findings through the time series regression analysis are as follows: First, inward FDI in China has a powerful impact on economic growth. According to Bhagwati’s hypothesis, FDI’s effect on economic growth in China is expected to very high because China is an export-leading country. Second, the economiceffect through inward FDI in China is slowed down due to the quality regulation of FDI in China from 2002. Finally, the tertiary education rather than the secondary one in China is expected to boost economic growth. This is the reason that the college education than secondary one in China is more adapted to foreign companies in China.