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

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Listed:
  • 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 and Public Policy Working Papers 2009-21, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2009-21
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    Cited by:

    1. Nguyen, Anh T.N. & Haug, Alfred A. & Owen, P. Dorian & Genç, Murat, 2020. "What drives bilateral foreign direct investment among Asian economies?," Economic Modelling, Elsevier, vol. 93(C), pages 125-141.
    2. Gnanaraj Chellaraj & Aaditya Mattoo, 2009. "Can the Knowledge-Capital Model Explain Sectoral Foreign Invesment? Evidence From Singapore," Economics Study Area Working Papers 101, East-West Center, Economics Study Area.
    3. Giray Gözgör & Muhlis Can, 2017. "Causal Linkages among the Product Diversification of Exports, Economic Globalization and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 888-908, August.
    4. Beine, Michel & Peri, Giovanni & Raux, Morgan, 2023. "International college students’ impact on the US skilled labor supply," Journal of Public Economics, Elsevier, vol. 223(C).
    5. Chellaraj,Gnanaraj & Mattoo,Aaditya & Chellaraj,Gnanaraj & Mattoo,Aaditya, 2015. "Can the knowledge capital model explain foreign investment in services ? the case of Singapore," Policy Research Working Paper Series 7186, The World Bank.
    6. Anh T. N. Nguyen & Andrzej Cieślik, 2021. "Determinants of foreign direct investment from Europe to Asia," The World Economy, Wiley Blackwell, vol. 44(6), pages 1842-1858, June.

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