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Skilled Migration, FDI and Human Capital Investment

Author

Listed:
  • Daniele Checchi

    (University of Milan and IZA)

  • Gianfranco De Simone

    (University of Milan and Centro Studi Luca d'Agliano)

  • Riccardo Faini

    (formerly University of Rome tor Vergata, CEPR, IZA and Centro Studi Luca d'Agliano)

Abstract

In a globalised world, where factors of production are increasingly mobile, the process of domestic accumulation of HC can be affected in several ways through migration and capital inflows. In addition, endowment of skilled labour and foreign direct investments(FDI) may reinforce each other through possible “complementary effects”. Our paper aims to advance the existing empirical literature on the relationship between international factor mobility and domestic accumulation of HC in developing countries. We provide new evidence on how the presence of foreign firms in the domestic economy and the emigration of skilled workers impact the domestic school enrolment. We also investigate whether existing supply of skilled labour is a significant determinant of inward flows of foreign capital. The interdependence between factor mobility and HC accumulation supports some simple back-of-the-envelop calculations that tend to exclude the presence of a significant ongoing virtuous circle between HC accumulation and FDI inflows. Less developed countries tend to gain domestic human capital under foreign capital inflow (job opportunities for skilled individuals), but they loose domestic human capital through the emigration of highly educated people both directly and indirectly (“disincentive effect” on further investment in higher education).

Suggested Citation

  • Daniele Checchi & Gianfranco De Simone & Riccardo Faini, 2007. "Skilled Migration, FDI and Human Capital Investment," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1067, Universitá degli Studi di Milano.
  • Handle: RePEc:bep:unimip:unimi-1067 Note: oai:cdlib1:unimi-1067
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    References listed on IDEAS

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    1. Faini, Riccardo, 2004. "Trade Liberalization in a Globalizing World," IZA Discussion Papers 1406, Institute for the Study of Labor (IZA).
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    Cited by:

    1. Artjoms IVLEVS & Jaime DE MELO, 2015. "FDI, the Brain Drain and Trade: Channels and Evidence," World Scientific Book Chapters,in: Developing Countries in the World Economy, chapter 21, pages 533-551 World Scientific Publishing Co. Pte. Ltd..
    2. DIACONU MAXIM Laura, 2015. "The Dynamics Of The Fdi Inflows During The Last Three Decades. A Comparative Analysis Between Developing And Developed Countries," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 67(3), pages 46-62.
    3. Nil Demet Gungor & Aysit Tansel, 2009. "Brain Drain from Turkey: Return Intentions of Skilled Migrants," ERC Working Papers 0902, ERC - Economic Research Center, Middle East Technical University, revised Oct 2009.
    4. Stepán Jurajda & Katherine Terrell, 2009. "Regional unemployment and human capital in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, pages 241-274.
    5. Dustmann, Christian & Glitz, Albrecht, 2011. "Migration and Education," Handbook of the Economics of Education, Elsevier.
    6. Mazhar Yasin MUGHAL & Natalia VECHIU, 2010. "The role of Foreign Direct Investment in higher education in the developing countries (Does FDI promote education?)," Working Papers 2010-2011_10, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Nov 2010.
    7. David Procházka & Cristina Procházková Ilinitchi, 2011. "The Theoretical Relationships among Foreign Direct Investments, Migration and IFRS Adoption," European Financial and Accounting Journal, University of Economics, Prague, vol. 2011(4), pages 85-100.
    8. Docquier, Frédéric & Lowell, B. Lindsay & Marfouk, Abdeslam, 2007. "A Gendered Assessment of the Brain Drain," IZA Discussion Papers 3235, Institute for the Study of Labor (IZA).
    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).
    10. Elisabetta LODIGIANI, 2009. "Diaspora Externalities as a Cornerstone of the New Brain Drain Literature," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009036, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    11. Asali, Muhammad & Cristobal-Campoamor, Adolfo, 2011. "Optimal foreign direct investment in the presence of human capital formation," MPRA Paper 31460, University Library of Munich, Germany.
    12. Acharyya, Rajat & Kar, Saibal, 2017. "On Asymmetric Migration Patterns from Developing Countries," GLO Discussion Paper Series 4, Global Labor Organization (GLO).

    More about this item

    Keywords

    Human Capital Investment; Factor Mobility; FDI; Brain Drain/Gain; Complementarity Effect; Developing Countries;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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