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Temporary Migration and Foreign Direct Investment


  • Daniela Federici


  • Marilena Giannetti



The question of complementarity or substitutability of FDI and international labour mobilityhas not yet been answered. The substitutability assumption does not take into consideration thetechnological spillover of FDI in the host countries. Moreover, migration flows reveal culturalcharacteristics and labour force properties of their native country which may stimulate bilateral business networks, strengthening the complementarity assumption between capital and labour flows. In this paper we build a continuous time dynamic model where these offsetting forces are at work. We analyze whether, and to what extent, the increase of labour mobility might affect FDI outflows. A numerical simulation is performed showing that to a higher labour mobility corresponds a higher income growth rate. Some policy implications and further research direction are suggested.
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Suggested Citation

  • Daniela Federici & Marilena Giannetti, 2010. "Temporary Migration and Foreign Direct Investment," Open Economies Review, Springer, vol. 21(2), pages 293-308, April.
  • Handle: RePEc:kap:openec:v:21:y:2010:i:2:p:293-308
    DOI: 10.1007/s11079-008-9092-6

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    References listed on IDEAS

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    Cited by:

    1. Masood Gheasi & Peter Nijkamp & Piet Rietveld, 2013. "Migration and foreign direct investment: education matters," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(1), pages 73-87, August.
    2. Jayet, H. & Marchal, L., 2016. "Migration and FDI: Reconciling the standard trade theory with empirical evidence," Economic Modelling, Elsevier, vol. 59(C), pages 46-66.
    3. Peter Simmons & Yuanyuan Xie, 2013. "Where is the grass greener? A micro-founded model of migration with application to Guangdong," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    4. Peter Simmons & Yuanyuan Xie, 2013. "Three musketeers: A dynamic model of capital inflow (FDI), the real wage rate and the net migration flow with empirical application," Discussion Papers 13/28, Department of Economics, University of York.
    5. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2017. "Anti-Migration as a Threat to Internationalization?," Ratio Working Papers 302, The Ratio Institute.
    6. Lastauskas, Povilas & Bičiūnaitė, Audrė, 2012. "Strategies for Deeper Integration: Case Study of the Baltics," MPRA Paper 43321, University Library of Munich, Germany.
    7. repec:pje:journl:article27sumvi is not listed on IDEAS
    8. repec:pje:journl:article27sumvii is not listed on IDEAS
    9. Ana Cuadros & Joan Martín-Montaner & Jordi Paniagua, 2017. "Migration and FDI: The role of job skills," Working Papers 2017/15, Economics Department, Universitat Jaume I, Castellón (Spain).

    More about this item


    Temporary migration; Migrant network; FDI; Dynamic model; J61; F21; F22;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration


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