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FDI led financial development hypothesis in emerging markets: the role of human capital development

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  • Kunofiwa Tsaurai

Abstract

The study investigated if human capital development is a channel through which foreign direct investment (FDI) affects financial development in emerging markets using dynamic generalised methods of moments (GMM) with data ranging from 1995 to 2014. Although literature exists, which conclusively found that FDI and human capital development separately influence financial development, none of the existing studies to the best of the author's best knowledge has so far investigated if human capital development is a channel through which financial development is influenced by FDI. The interaction between FDI and human capital development enhanced stock market development whereas the complementarity between human capital development and FDI was not enough to overturn the negative impact of FDI on bond sector development triggered by crowding out effects. The study therefore urges emerging markets to implement a policy that increases human capital development in order to enhance FDI's positive influence on stock market development.

Suggested Citation

  • Kunofiwa Tsaurai, 2018. "FDI led financial development hypothesis in emerging markets: the role of human capital development," International Journal of Education Economics and Development, Inderscience Enterprises Ltd, vol. 9(2), pages 109-123.
    • Handle: RePEc:ids:ijeded:v:9:y:2018:i:2:p:109-123
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    Citations

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    Cited by:

    1. Udi Joshua & David Babatunde & Samuel Asumadu Sarkodie, 2021. "Sustaining Economic Growth in Sub-Saharan Africa: Do FDI Inflows and External Debt Count?," JRFM, MDPI, vol. 14(4), pages 1-13, March.
    2. Kunofiwa Tsaurai & Bester Chimbo, 2019. "The Impact of Information and Communication Technology on Carbon Emissions in Emerging Markets," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 320-326.

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