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FDI, the Brain Drain and Trade: Channels and Evidence

  • Artjoms IVLEVS
  • Jaime DE MELO

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 102 migration-sending countries over the period 1990-2000 finds some support for this conjecture

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File URL: http://www.jstor.org/stable/41219111
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Article provided by ENSAE in its journal Annals of Economics and Statistics.

Volume (Year): (2010)
Issue (Month): 97-98 ()
Pages: 103-121

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Handle: RePEc:adr:anecst:y:2010:i:97-98:p:05
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