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Temporary migration and foreign direct investment

  • Daniela Federici

    (University of Cassino)

  • Marilena Giannetti

    (University of Rome "La Sapienza")

The question of complementarity or substitutability of FDI and international labour mobility has not yet been answered. The substitutability assumption does not take into consideration the technological spillover of FDI in the host countries. Moreover, migration flows reveal cultural characteristics 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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Paper provided by Universita' di Cassino, Dipartimento di Scienze Economiche in its series Working Papers with number 2008-03.

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Length: 29 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:css:wpaper:2008-03
Contact details of provider: Postal: Dipartimento di Scienze Economiche Via S. Angelo Loc. Folcara 03043 Cassino (FR) - Italy
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