African Leaders: Their Education Abroad and FDI Flows
AbstractLeaders are critical to a country's success. They can influence domestic policy via specific measures that they enforce, and they can also influence international public opinion towards their country. Foreign Direct Investments are also essential for a country's economic growth. Our hypothesis is that foreign-educated leaders attract more FDI to their country. Our rationale is that education obtained abroad encompasses a whole slew of factors that can make a difference in FDI flows when this foreign-educated individual becomes a leader. We test this hypothesis empirically with a unique dataset that we constructed from several sources, including the Library of Congress and the World Bank. Our analysis of 40 African countries employs the robust technique of conditional quantile regression. Our results reveal that foreign education is a significant determinant of FDI inflows, beyond other standard characteristics. While intuitive, this result does not necessarily indicate sheepskin effects or superior human capital obtained abroad. Rather, it indicates the powerful role of the social capital, networks, and connections that these leaders built while they were abroad that they in turn mobilize and utilize when they become leaders.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1087.
Length: 27 p.
Date of creation: 2010
Date of revision:
FDI; Leaders' Educational level; return migration; Africa;
Other versions of this item:
- Constant, Amelie F. & Tien, Bienvenue N., 2010. "African Leaders: Their Education Abroad and FDI Flows," IZA Discussion Papers 5353, Institute for the Study of Labor (IZA).
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
This paper has been announced in the following NEP Reports:
- NEP-AFR-2011-01-03 (Africa)
- NEP-ALL-2011-01-03 (All new papers)
- NEP-DEV-2011-01-03 (Development)
- NEP-IFN-2011-01-03 (International Finance)
- NEP-LAB-2011-01-03 (Labour Economics)
- NEP-MIG-2011-01-03 (Economics of Human Migration)
You can help add them by filling out this form.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Want more FDI in Africa? Get a foreign-trained leader
by Economic Logician in Economic Logic on 2011-02-04 15:01:00
- Foreign Educated Leaders Attract More FDI
by Ariel Goldring in Free Market Mojo on 2011-02-05 12:30:25
- Constant, Amelie F. & Tien, Bienvenue N., 2011. "Surviving the Turbulence Is Not Enough: Can Côte d'Ivoire Flourish Again?," IZA Policy Papers 30, Institute for the Study of Labor (IZA).
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