Human Capital and Inward FDI PDF Download

Author: Magnus Blomström
Publisher:
ISBN:
Category : Business enterprises, Foreign
Languages : en
Pages : 32

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Author: Artane Rizvanolli
Publisher:
ISBN:
Category :
Languages : en
Pages :

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A country's human capital has been neglected as a potential determinant of inwards foreign direct investment (FDI), both in theory and empirical research. When human capital has been included in models of the determinants of FDI, it appears simply as a control variable or one of the variables in a "kitchen sink" approach, usually without any theoretical rationale for its inclusion or critical discussion of the measures used. The mis-specification that may result from this is advanced as one of the potential explanations for the very diverse findings in previous literature and the failure of the meta-regression analysis (MRA) reported in this thesis to find an 'authentic' effect of human capital on inwards FDI. Accordingly, this research seeks to fill this gap, by identifying the mechanism through which human capital is expected to attract! FDI to European transition economies and drawing conclusions about the most appropriate measures of human capital given the characteristics of the former communist (education) system. The ' productivity-enhancing' skills and traits that (foreign) investors are likely to value in such economies are identified and the manner in which these skills are developed is analysed. In the light of this analysis the conventional human capital measures used in empirical analyses are critically assessed. These contributions are used to develop an empirical model for estimating the effect of human capital on inwards FD[ at country-, sector- and industry-level in 12 European transition economies during the period 1995-2008. Consistent with the results of previous studies. as suggested by the MRA, no significant effect of traditional volume measures of human capital on FDI inflows/stocks/stocks is found. However, some evidence is presented in this thesis indicating that the quality dimension of human capital as measured by cognitive skills proxies may affect inwards 1--"01 in the manufacturing sector. Accordingly, several potential explanations for the findings and some of their implications for future macro-level research focusing on the effects of human capital are explored.

Author: Abdulmohsen Alalshiekh
Publisher:
ISBN:
Category :
Languages : en
Pages :

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Author: Hang Le
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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This paper studies the impact of human capital on the relationship between inward foreign direct investment and economic growth in ASEAN and Latin America during 1975-1995. We test two hypotheses. First, we hypothesise that there is a two-way relationship between economic growth and FDI. Second, we hypothesise that human capital is a positive factor that facilitates this relationship as it could improve the contribution of FDI to economic growth, especially FDI's contribution to productive capacity and to the shift toward technology-intensive and value-added production and exports, and it helps the country to attract more FDI and could help to attract the types of FDI that promote higher economic growth. We test the hypotheses using simultaneous equation for panel data for the ASEAN and Latin American countries during 1975-1995. The empirical results do not reject the hypotheses. Human capital is found to be a positive factor in the two-way relationship between growth and FDI in the ASEAN countries during 1975-1995. We use three proxies for human capital and find that real public spending on education and labour productivity are positive factors that enhance the contribution of FDI to economic growth. Meanwhile education attainment weighted by earnings of educational groups is a positive determinant of FDI.

Author: Ikeoluwapo Oyenuga
Publisher:
ISBN:
Category : Political planning
Languages : en
Pages : 82

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Few empirical studies have been conducted to support the argument that countries with stronger human capital attract more foreign direct investment. Where available, these studies use quantitative measures of education attainment that do not account for varying quality of education systems across countries. Using four years of test score data from the Programme for International Student Assessment conducted in a sample of middle-to-high income countries, this paper tests the hypothesis that the quality of human capital affects the amount of foreign direct investment a country attracts. The empirical results show a statistically significant negative correlation between test scores and inward foreign direct investment, suggesting that countries that perform better on the test receive less foreign direct investment, on average.

Author: Mohammad Sharif Karimi
Publisher: LAP Lambert Academic Publishing
ISBN: 9783848405527
Category :
Languages : en
Pages : 212

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Foreign Direct Investment (FDI) and Human Capital (HC) are two areas of paramount importance to the economic growth and prosperity of any developed nation. While FDI and HC individually affect growth, they also reinforce and complement each other with varying effects. Not only have these topics been widely studied, they have also been the inspiration and focal point of two substantial bodies of literature. However, the links between these two engines of growth have been less explored. FDI inflows into developed countries over the past two decades are significantly higher than what developing countries receive and there is a huge gap between them. One of the characteristics of rich industrial economies is the availability of a workforce with a high level of HC. Whether HC has been the key driver of FDI or vice-versa is still a matter of debate.

Author: Mr.Eduardo Borensztein
Publisher: International Monetary Fund
ISBN: 1451853270
Category : Business & Economics
Languages : en
Pages : 26

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We test the effect of foreign direct investment (FDI) on economic growth in a cross-country regression framework, utilizing data on FDI flows from industrial countries to 69 developing countries over the last two decades. Our results suggest that FDI is an important vehicle for the transfer of technology, contributing relatively more to growth than domestic investment. However, the higher productivity of FDI holds only when the host country has a minimum threshold stock of human capital. In addition, FDI has the effect of increasing total investment in the economy more than one for one, which suggests the predominance of complementarity effects with domestic firms.

Author: Arkadiusz Mironko
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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When making a strategic location choice multinational corporations (MNCs) examine a number of conditions which influence the investment before settling on the location choice that includes human capital and availability of a skilled workforce. This paper will test the importance of the relationship between geographic distribution and clustering of foreign firms and the influence of human capital and skill present in the regions, generally represented by major cities, on the location choice strategy and innovation activity of foreign investors across regions in the host economy of a developing nation.Testing the data on the location of foreign firms and skilled workforce (among other factors) in the regions across Poland, this study finds that a higher level of presence of skilled workforce in the regions tends to attract higher value-added and service-related foreign subsidiaries into them hence, furthering the development of the host cities and regions.Also, the industries with higher amounts of foreign investment tend to narrow their industrial specialization, in some regions including also smaller regions such as Podkarpackie, while Mazowieckie (the leading region) continues to attract higher value-added and service FDI despite the highest labor cost.

Author: Fisayo Fagbemi
Publisher:
ISBN:
Category :
Languages : en
Pages :

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The paper assesses the interconnections between FDI and human capital development in Nigeria over the period 1981-2018. The analysis is carried out with the use of both non-linear autoregressive distributed lag (NARDL) and linear ARDL bounds test approach to cointegration, and VECM Granger causality technique. Findings reveal that the effect of FDI on human capital is found to be insignificant in the long run, while it is significant in the short run. However, following the asymmetric link, the empirical evidence reveals that a rise in FDI inflows to a certain rate, in the long-run, could result in a significant increase in the level of human capital development, suggesting that the magnitude of inward FDI matters in the economy. This further implies that as FDI inflows require sound technical know-how, and more skilled labour to work with or adapt to more advanced technologies, such could draw attention to improved human capital. Results also indicate that there is unidirectional causality between FDI and human capital in the long run, which runs from human capital to FDI, suggesting that the quality of human capital matters for sustainable leverage and attractiveness of FDI inflows. By implication, it is critical to adopt policy measures that could engender the sustainable development of human capital by the government, while the underlying structural bottlenecks and protracted state of insecurity that could deter foreign investors are accorded significant attention.

Author: Rajneesh Narula
Publisher:
ISBN:
Category :
Languages : en
Pages : 52

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It is nowadays generally accepted that inward foreign direct investment (FDI) is crucial as a source of technological spillovers. One of the objectives of this paper is to review the evidence on the quantity and quality of human capital employed by domestic and foreign firms. We examine whether spillovers accrue from MNE activity, and provide a preliminary understanding of why MNE spillovers remain somewhat ambiguous, particularly in developing countries, paying particular attention to human capital development. Our analysis is supported by data from the Innovation Survey in Argentina. On the whole, MNE subsidiaries hired more professionals than domestic firms of the same size, possessed a more skilled labour force overall, and spent more on training than similar domestic firms. Subsidiaries in Argentina effectively have a higher labour productivity and pay higher wages. Yet, in terms of knowledge creation and utilisation, there was little to differentiate affiliates from domestic firms. While there is little evidence of widespread FDI spillovers, where spillovers did occur, it was where domestic firms demonstrated high investment in absorptive capacities. Our analysis also suggests that much of MNE activity - particularly after liberalisation - has been of the kind that by definition has limited opportunities for linkages and spillovers. These are activities in which MNEs may simply be able to generate economic rent from their superior knowledge of markets, and their ability to efficiently utilise their multinational network of affiliates. These assets are not generally easily spilled over to domestic firms.