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Labor Skills and Foreign Investment in a Dynamic Economy: Estimating the Knowledge-Capital Model for Singapore

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  • Gnanaraj Chellaraj

    ()

  • Keith Maskus

    () (Universtiy of Colorado, Boulder)

  • Aaditya Mattoo

    () (Development Economics Research Group, World Bank)

Abstract

Singapore is an interesting example of how the pattern of foreign investment changes with economic development. In this paper, we analyze inbound and outbound investment between Singapore and a sample of industrialized and developing countries over the period 1984-2003. We find that SingaporeÂ’s two-way investment with industrialized nations has shifted into skill-seeking activities over the period, while SingaporeÂ’s investments in developing countries have increased sharply and become concentrated in labor-seeking activities. SingaporeÂ’s increasing skill abundance relative to all countries in our sample accounted for 41 per cent of average inbound stocks during the period, i.e. US$18 billion annually; the corresponding figure for outbound stocks was 40 per cent, i.e. US$5.51 billion annually.

Suggested Citation

  • Gnanaraj Chellaraj & Keith Maskus & Aaditya Mattoo, 2009. "Labor Skills and Foreign Investment in a Dynamic Economy: Estimating the Knowledge-Capital Model for Singapore," School of Economics Working Papers 2009-21, University of Adelaide, School of Economics.
  • Handle: RePEc:adl:wpaper:2009-21
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    File URL: http://www.economics.adelaide.edu.au/research/papers/doc/wp2009-21.pdf
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