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Skilled Migration, FDI and Human Capital Investment

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Author Info

  • Checchi, Daniele

    ()
    (University of Milan)

  • De Simone, Gianfranco

    ()
    (Fondazione Giovanni Agnelli)

  • Faini, Riccardo

    (University of Rome Tor Vergata)

Abstract

It is commonly believed that accumulation of human capital (HC) and availability of physical and financial capitals are among the major determinants of economic growth. In a globalised world, where factors of production are increasingly mobile, the process of domestic accumulation of HC might be affected in several ways through migration and capital inflows. Furthermore, endowment of skilled labour and foreign direct investments (FDI) may reinforce each other through possible “complementary effects”. Our paper aims to advance the existing empirical literature on the relationship between international factor mobility and domestic accumulation of HC in developing countries. We provide new evidence on how the presence of foreign firms in the domestic economy and the emigration of skilled workers impact the domestic school enrolment. We also investigate whether existing supply of skilled labour is a significant determinant of inward flows of foreign capital. The interdependence between factor mobility and HC accumulation supports some simple back-of-the-envelop calculations aiming to investigate the presence of a virtuous (vicious) circle between HC accumulation and FDI inflows.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2795.

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Length: 32 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2795

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Keywords: human capital investment; factor mobility; FDI; brain drain/gain; complementarity effects; developing countries;

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References

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  1. José Luis Groizard & Joan Llull, 2006. "Skilled migration and growth. Testing brain drain and brain gain theories," DEA Working Papers 20, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  2. Oded Stark & Christian Helmenstein & Alexia Prskawetz, 1998. "Human Capital Depletion, Human Capital Formation, and Migration: A Blessing in a "Curse"?," Departmental Working Papers _096, Chinese University of Hong Kong, Department of Economics.
  3. Frédéric Docquier & Elisabetta Lodigiani, 2007. "Skilled Migration and Business Networks," Development Working Papers 234, Centro Studi Luca d\'Agliano, University of Milano.
  4. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February.
  5. Daniele Checchi, 1999. "Inequality in Incomes and Access to Education. A Cross-Country Analysis (1960-95)," Development Working Papers 125, Centro Studi Luca d\'Agliano, University of Milano.
  6. Sapir, André, 2000. "Who is Afraid of Globalization? The Challenge of Domestic Adjustment in Europe and America," CEPR Discussion Papers 2595, C.E.P.R. Discussion Papers.
  7. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A brain gain with a brain drain," Economics Letters, Elsevier, vol. 55(2), pages 227-234, August.
  8. William Carrington & Enrica Detragiache, 1998. "How Big is the Brain Drain?," IMF Working Papers 98/102, International Monetary Fund.
  9. Bruce Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," Atlantic Economic Journal, International Atlantic Economic Society, vol. 33(4), pages 383-403, December.
  10. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," CID Working Papers 42, Center for International Development at Harvard University.
  11. Faini, Riccardo, 2004. "Trade Liberalization in a Globalizing World," IZA Discussion Papers 1406, Institute for the Study of Labor (IZA).
  12. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
  13. Fabio, MARIANI, 2004. "Brain Drain, Inequality and Growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004033, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  14. Koji Miyamoto, 2003. "Human Capital Formation and Foreign Direct Investment in Developing Countries," OECD Development Centre Working Papers 211, OECD Publishing.
  15. Michael Grossman, 2005. "Education and Nonmarket Outcomes," NBER Working Papers 11582, National Bureau of Economic Research, Inc.
  16. Docquier, Frederic & Marfouk, Abdeslam, 2004. "Measuring the international mobility of skilled workers (1990-2000) : release 1.0," Policy Research Working Paper Series 3381, The World Bank.
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Citations

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Cited by:
  1. Docquier, Frédéric & Lowell, B. Lindsay & Marfouk, Abdeslam, 2007. "A Gendered Assessment of the Brain Drain," IZA Discussion Papers 3235, Institute for the Study of Labor (IZA).
  2. Jurajda, Stepan & Terrell, Katherine, 2007. "Regional Unemployment and Human Capital in Transition Economies," CEPR Discussion Papers 6569, C.E.P.R. Discussion Papers.
  3. Christian Dustmann & Albrecht Glitz, 2011. "Migration and Education," CReAM Discussion Paper Series 1105, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  4. Elisabetta LODIGIANI, 2009. "Diaspora Externalities as a Cornerstone of the New Brain Drain Literature," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009036, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. Nil Demet Güngör & Aysit Tansel, 2011. "Brain Drain from Turkey: Return Intentions of Skilled Migrants," Koç University-TUSIAD Economic Research Forum Working Papers 1103, Koc University-TUSIAD Economic Research Forum.
  6. Artjoms Ivlevs & Jaime de Melo, . "FDI, the Brain Drain and Trade: Channels and Evidence," Discussion Papers 08/40, University of Nottingham, GEP.
  7. 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.
  8. Asali, Muhammad & Cristobal-Campoamor, Adolfo, 2011. "Optimal foreign direct investment in the presence of human capital formation," MPRA Paper 31460, University Library of Munich, Germany.
  9. Mazhar MUGHAL & Natalia VECHIU, 2010. "The role of Foreign Direct Investment in higher education in the developing countries (Does FDI promote education?)," Working Papers 2010-2011_10, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Nov 2010.

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