TY - BOOK ID - 138923301 TI - Does Foreign Direct Investment Catalyze Local Structural Transformation and Human CapitalAccumulation? : Evidence from China PY - 2022 PB - Washington, D.C. : The World Bank, DB - UniCat KW - Investments, Foreign KW - Economic development. KW - Human capital. UR - https://www.unicat.be/uniCat?func=search&query=sysid:138923301 AB - 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. ER -