Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

How does Human Capital Heterogeneity Affect Chinese Enterprises' Direct Investment in Africa?

Version 1 : Received: 31 October 2021 / Approved: 3 November 2021 / Online: 3 November 2021 (09:16:52 CET)

How to cite: Gao, C.; Zhang, D.; Cao, M.; Wen, Y. How does Human Capital Heterogeneity Affect Chinese Enterprises' Direct Investment in Africa?. Preprints 2021, 2021110075 (doi: 10.20944/preprints202111.0075.v1). Gao, C.; Zhang, D.; Cao, M.; Wen, Y. How does Human Capital Heterogeneity Affect Chinese Enterprises' Direct Investment in Africa?. Preprints 2021, 2021110075 (doi: 10.20944/preprints202111.0075.v1).

Abstract

Is human capital heterogeneity a decisive factor for Chinese enterprises to invest in Africa? Based on the Outward Foreign Direct Investment (OFDI) data of Chinese enterprises in 37 African countries from 2007 to 2017, this paper using the FGLS model, is the empirical analysis of the mechanism and effect of the human capital heterogeneity of host countries on OFDI location selection. The human capital heterogeneity can be divided into four dimensions: scale, quality, cost and structure, which can be measured by health level, education level, wage level, child dependency ratio and old-age dependency ratio. The results show that: (1) the host country's human capital scale and child dependency ratio structure have a significant positive impact on decision-making for OFDI; (2) the cost of human capital and the structure of old-age dependency ratio are negatively correlated with the inflow of OFDI; (3) different from the existing conclusions, the quality of human capital will inhibit the inflow of OFDI in the sample period; (4) the extended test shows that the quality of human capital has a significant positive impact on OFDI decision-making. The results of robustness test are reliable. Finally, according to the conclusion of this paper, policy recommendations are put forward.

Keywords

Africa; Human Capital; OFDI; Heterogeneity

Subject

SOCIAL SCIENCES, Economics

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