Resource Dependence and Human Capital Investment in China

Abstract

Countries endowed with rich natural resources such as fuel and minerals often fall behind in human development. Does resource endowment hamper human capital development in China, a country that hosts rich resources in many of its regions? Through cross-regional and longitudinal statistical analysis and field research in selected mining areas, this study finds that resource dependence decreases government expenditure on human capital-enhancing public goods including education and health care. The local economic structure and decreased demand for labor, the shift of government responsibilities onto mining enterprises, and the myopia of local residents and officials all discourage the local governments in resource-rich regions from investing in human capital.

Keywords: China, curse of natural resources, human capital, local public goods provision, mixed research method