ABSTRACT
An assessment of the role of exports and foreign direct investment (FDI), in Shanghai's economic transformation is of obvious importance. This chapter focuses on the role of exports and FDI with human capital, in determining the long-run economic growth of Shanghai. It explores strong and robust evidence of positive effects of exports and FDI on economic growth and an interaction between human capital and growth in the export/gross domestic product (GDP) ratio and FDI/GDP ratio. These results indicate the significant role of exports and FDI in Shanghai's productivity growth and a high degree of complementarity between globalization and human capital accumulation. Shanghai's success in globalization through exports suggests that good export performance could make a major contribution to economic growth through some channels. These channels include increasing specialization and expanding the efficiency-raising benefits of comparative advantage; offering greater economies of scale due to an enlargement of the effective market size; affording greater capacity utilization and inducing more rapid technological changes.
