Demographics and FDI : lessons from China's one-child policy
- Following the introduction of the one-child policy in China, the capital-labor (K/L) ratio of China increased relative to that of India, and, simultaneously, FDI inflows relative to GDP for China versus India declined. These observations are explained in the context of a simple neoclassical OLG paradigm. The adjustment mechanism works as follows: the reduction in the growth rate of the (urban) labor force due to the one-child policy permanently increases the capital per worker inherited from the previous generation. The resulting increase in China's (domestic K)/L thus "crowds out" the need for FDI in China relative to India. Our paper is a contribution to the nascent literature exploring demographic transitions and their effects on FDI flows.
Author: | John Donaldson, Christos Koulovatianos, Jian Li, Rajnish Mehra |
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URN: | urn:nbn:de:hebis:30:3-480187 |
URL: | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3289940 |
Parent Title (English): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 613 |
Series (Serial Number): | CFS working paper series (613) |
Publisher: | Center for Financial Studies |
Place of publication: | Frankfurt, M. |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2018 |
Year of first Publication: | 2018 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2018/11/29 |
Tag: | FDI-intensity; Lucas paradox; capital-labor ratio; one-child policy |
Issue: | Revised November 1, 2018 |
Page Number: | 46 |
HeBIS-PPN: | 439817153 |
Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Sammlungen: | Universitätspublikationen |
Licence (German): | Deutsches Urheberrecht |