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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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Article provided by Springer in its journal Open Economies Review.

Volume (Year): 21 (2010)
Issue (Month): 2 (April)
Pages: 293-308

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Handle: RePEc:kap:openec:v:21:y:2010:i:2:p:293-308
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