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FDI, the Brain Drain and Trade: Channels and Evidence

  • de Melo, Jaime
  • Ivlevs, Artjoms

This paper explores the links between the patterns of migration (high vs. low-skill), trade policy, and foreign direct investment (FDI) from the standpoint of sending countries. A skeleton general equilibrium model with a non-traded good and sector-specific labour is used to explore the effects of the skill-composition of exports on FDI. The model suggests that if exports are low-skill intensive, emigration of high- skill labour leads to positive FDI, suggesting that migration and FDI are complements. Cross-sectional analysis using FDI and emigration data for 103 migration-sending countries over the period 1990-2000 finds some support for this conjecture.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7002.

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Date of creation: Oct 2008
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Handle: RePEc:cpr:ceprdp:7002
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