The Effect of Human Capital Flow on FDI Technological Advances: An Empirical Study Based on Absorptive Capacity

Human capital flow is an important factor that affecting the "absorptive capacity" of host countries, it is of great significance to strengthen the host countries\´ absorptive capacity of FDI technology spillovers. Taking China for example, this paper made an empirical analysis about the effect of human capital flows on FDI technological advances, we selected the number of foreign students and the number of students that return home, as well as the employment rate of foreign Enterprise as proxy indicators of human capital flows, using data envelopment analysis (DEA) to measure the technological progress of China. The empirical results showed that: FDI and human capital flows, combined with technological advances were positively correlated, but the positive effect was not significant. China should improve the quality and enhance the overall level of human capital flows, in order to create a superior environment of qualified personnel for FDI technology spillover.