Demographics and FDI: Lessons from China's One-Child Policy

John B. Donaldson, Christos Koulovatianos, Jian Li () and Rajnish Mehra

No 24256, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Following the introduction of the one-child policy in China, the capital-labor ratio of China increased relative to that of India, while FDI/GDP inflows to China vs India simultaneously 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 increases the capital per worker inherited from the previous generation. The resulting increase in China’s domestic capital-labor ratio 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.

JEL-codes: E13 F11 F12 J11 O11 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-cna, nep-lab, nep-mac and nep-tra
Note: DEV EFG ITI
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w24256.pdf (application/pdf)

Related works:
Journal Article: Demographics and FDI: lessons from China’s one-child policy (2025)
Working Paper: Demographics and FDI: Lessons from China’s One-Child Policy (2018)
Working Paper: Demographics and FDI: Lessons from China's one-child policy (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:24256

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w24256

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().