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Virtuous Circles? Human Capital Formation, Economic Development and the Multinational Enterprise

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Author Info
Ethan B. Kapstein ()
Abstract

In recent years, academics and policy makers have emphasised the role of human capital formation in economic development. By creating human capital, countries become more attractive to private investment, both domestic and foreign. And through such investment, countries grow and prosper.

Yet the empirical evidence in support of this theory remains elusive. While foreign direct investment (FDI) has multiplied in many countries around the world since the 1980s, its effects on growth are uncertain. Why is that the case?

In this paper I argue that political economy pathways exist that may lead countries away from sustained growth. In countries that lack well-developed capital and education markets, many otherwise qualified citizens may be denied the basic skills they need in order to contribute fully to the nation’s economic development. As societies become divided, they become more conflicted, and this conflict dampens growth, irrespective of the level of foreign direct investment ...


Au cours des dernières années, chercheurs et décideurs ont insisté sur le rôle de la formation du capital humain dans le développement économique. En créant du capital humain, les pays deviennent plus attractifs pour l’investissement privé, qu’il soit national ou étranger. Et cet investissement apporte croissance et prospérité.

Les données empiriques à l’appui de cette théorie sont toutefois ambiguës. Bien que l’investissement direct étranger se soit fortement accru dans nombre de pays depuis les années 80, son effet sur la croissance n’est pas très bien établi. Pourquoi ?

Ce Document technique met en évidence des orientations d’économie politique susceptibles d’éloigner les pays d’une croissance durable. En particulier, dans les pays qui n’ont pas un marché bien développé des capitaux et de l’éducation, beaucoup d’individus qualifiés ne trouvent pas les compétences de base dont ils ont besoin pour participer pleinement au développement économique national. A mesure que les sociétés ...

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Paper provided by OECD Development Centre in its series OECD Development Centre Working Papers with number 191.

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Date of creation: Aug 2002
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Handle: RePEc:oec:devaaa:191-en

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  1. Narula,Rajneesh & Marin,Anabel, 2003. "FDI spillovers, absorptive capacities and human capital development: evidence from Argentina," Research Memoranda 018, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
  2. Rejneesh Narula, 2004. "Understanding Absorptive Capacities in an "Innovation Systems" Context: Consequences for Economic and Employment Growth," DRUID Working Papers 04-02, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
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