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

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.

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Institutional, Economic, and Socio-Economic Determinants of the Entrepreneurial Activity of Nations

Administrative Sciences ◽

10.3390/admsci11010026 ◽

2021 ◽

Vol 11 (1) ◽

pp. 26

Author(s):

João Leitão ◽

João Capucho

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Entrepreneurial Activity ◽

Dependency Ratio ◽

Age Dependency ◽

Consumption Expenditure ◽

Economic Determinants ◽

Institutional Economic ◽

Life Expectancy At Birth ◽

Age Dependency Ratio

This empirical study analyses the effects of institutional, economic, and socio-economic determinants on total entrepreneurial activity in the contexts of developed and developing countries. It fills a gap in the literature, regarding the lack of empirical studies about the relationships among entrepreneurial activity, corruption, commercial freedom, economic growth, innovativeness, inward foreign direct investment, unemployment, households, and non-profit institutions serving households (NPISHs)’ final consumption expenditure, age dependency ratio, education index, and life expectancy at birth. The empirical application uses annual panel data for the 2003–2018 period, with a total sample of 21 countries, analysed in a two-stage empirical application, including preliminary analysis and a quantile regression model. New empirical evidence is provided, revealing a significantly positive role played by commercial freedom, innovativeness, inward foreign direct investment, households, and NPISHs’ final consumption expenditure and education on entrepreneurial activity. Corruption, unemployment, age dependency ratio, and life expectancy at birth have a significantly negative influence on entrepreneurial activity. In terms of implications, greater government control is recommended, in order to foster the quality of nations’ institutional environment. Additionally, suggested is the launch of new incentives to stimulate research and development activities aimed at registering international patents with a global impact, sourced from new ventures and transnational collaboration.

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