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FDI, the Brain Drain and Trade: Channels and Evidence

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  • de Melo, Jaime
  • Ivlevs, Artjoms

Abstract

This paper explores the links between the patterns of migration (high vs. low-skill), trade policy, and foreign direct investment (FDI) from the standpoint of sending countries. A skeleton general equilibrium model with a non-traded good and sector-specific labour is used to explore the effects of the skill-composition of exports on FDI. The model suggests that if exports are low-skill intensive, emigration of high- skill labour leads to positive FDI, suggesting that migration and FDI are complements. Cross-sectional analysis using FDI and emigration data for 103 migration-sending countries over the period 1990-2000 finds some support for this conjecture.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7002.

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Date of creation: Oct 2008
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Handle: RePEc:cpr:ceprdp:7002

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Keywords: Brain Drain; FDI; Migration; Trade;

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Cited by:
  1. Docquier, Frédéric & Marchiori, Luca & Shen, I-Ling, 2010. "Brain drain in globalization: A general equilibrium analysis from the sending countries’ perspective," CEPR Discussion Papers 7682, C.E.P.R. Discussion Papers.
  2. Di Maria, Corrado & Lazarova, Emiliya A., 2012. "Migration, Human Capital Formation, and Growth: An Empirical Investigation," World Development, Elsevier, vol. 40(5), pages 938-955.
  3. Schiff, Maurice, 2010. "Small State Regional Cooperation, South-South and South-North Migration, and International Trade," IZA Discussion Papers 4938, Institute for the Study of Labor (IZA).
  4. David Procházka & Cristina Procházková Ilinitchi, 2011. "The Theoretical Relationships among Foreign Direct Investments, Migration and IFRS Adoption," European Financial and Accounting Journal, University of Economics, Prague, vol. 2011(4), pages 85-100.

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