Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence

Determinants of foreign direct investment in services

“…This is the standard measure of openness in the FDI literature, and Chakrabarti (2001) finds that though it does not pass the EBA test, it is the variable most likely to be correlated with aggregate FDI besides market size. A number of other studies of aggregate FDI flows also find this variable significant, such as Singh and Jun (1995), Noorbakhsh et al (2001), Asiedu (2002), Kolstad and Villanger (2004a). The measure of trade openness adopted deviates from those used by the stud ies of finance FDI, though, which makes the results less directly comparable.…”

The New Global Determinants of Fdi Flows to Developing Countries: The Importance of Ict and Democratization

“…In contrast, governments have greater powers to encourage 'vertical' FDI, which entails the relocation of intermediate stages of production to take advantage of lower costs. Aside from a supportive policy framework, the human capital stock heavily influences FDI flows and the associated technology transfer (Keller 1996;Noorbakhsh et al 2001;Saggi 2002). As large investments in education and training raised THE national supplies of skilled labour, Malaysia, Singapore, Taiwan and later China were able to move up the value-added 'ladder' from manufacturing-intensive unskilled labour, enabling them to create highly effective partnerships with foreign investors to import, use and (soon after) develop high technology.…”

“…These new global forces must be seen alongside the longstanding determinants of FDI flows to developing countries: their natural-resource endowments, geographical characteristics (country location in particular), human capital, infrastructure, and institutions, factors emphasized in the existing literature (see for example De Mello 1997; Noorbakhsh et al 2001). These factors have contributed to a highly skewed distribution of FDI across countries: 15 countries account for over 80 per cent of FDI to developing countries, and the 49 least developed countries (LDCs) attracted only 0.3 per cent of world FDI inflows in 2000 (UNCTAD 2001: xiii).…”

Determinants of Employment Growth at MNEs: Evidence from Egypt, India, South Africa and Vietnam

“…The literature on foreign direct investment (FDI) has traditionally addressed three issues, namely, the determinants of the volume of FDI inflow to a country (e.g., Borenszstein, de Gregorio and Lee, 1995;Noorbakhsh, Paloni and Youssef, 2001;Globerman and Shapiro, 2002;Habib and Zurawicki, 2002), the determinants of the choice of entry mode of a multinational enterprise (MNE) entering a new country (e.g., Agarwal and Ramaswami, 1992;Hennart and Park, 1993;Görg, 2001;Luo, 2001;Barbosa and Louri, 2002;Gleason, Lee and Mathur, 2002), and the spillover effects of FDI. The spillover effects, it has been argued, comes largely in the form of technology transfer by MNCs to their foreign subsidiaries and the consequent improvement in productivity of domestic firms in the host countries (e.g., Mansfield and Romeo, 1980;Hasan, 2002;Patibandla andPetersen, 2002, Sinani andMeyer, 2004).…”