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African Leaders: Their Education Abroad and FDI Flows

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  • Amelie Constant
  • Bienvenue N. Tien

Abstract

Leaders are critical to a country's success. They can influence domestic policy via specific measures that they enforce, and they can also influence international public opinion towards their country. Foreign Direct Investments are also essential for a country's economic growth. Our hypothesis is that foreign-educated leaders attract more FDI to their country. Our rationale is that education obtained abroad encompasses a whole slew of factors that can make a difference in FDI flows when this foreign-educated individual becomes a leader. We test this hypothesis empirically with a unique dataset that we constructed from several sources, including the Library of Congress and the World Bank. Our analysis of 40 African countries employs the robust technique of conditional quantile regression. Our results reveal that foreign education is a significant determinant of FDI inflows, beyond other standard characteristics. While intuitive, this result does not necessarily indicate sheepskin effects or superior human capital obtained abroad. Rather, it indicates the powerful role of the social capital, networks, and connections that these leaders built while they were abroad that they in turn mobilize and utilize when they become leaders.

Suggested Citation

  • Amelie Constant & Bienvenue N. Tien, 2010. "African Leaders: Their Education Abroad and FDI Flows," Discussion Papers of DIW Berlin 1087, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1087
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    References listed on IDEAS

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Want more FDI in Africa? Get a foreign-trained leader
      by Economic Logician in Economic Logic on 2011-02-04 21:01:00
    2. Foreign Educated Leaders Attract More FDI
      by Ariel Goldring in Free Market Mojo on 2011-02-05 18:30:25

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    Cited by:

    1. Michael A. Clemens, 2016. "Losing our minds? New research directions on skilled emigration and development," International Journal of Manpower, Emerald Group Publishing, vol. 37(7), pages 1227-1248, October.
    2. Diaz-Serrano, Luis & Pérez, Jessica, 2013. "Do More Educated Leaders Raise Citizens' Education?," IZA Discussion Papers 7661, Institute for the Study of Labor (IZA).
    3. repec:eme:ijmpps:v:37:y:2016:i:7:p:1110-1135 is not listed on IDEAS
    4. Amelie F. Constant & Klaus F. Zimmermann, 2016. "Diaspora economics: new perspectives," International Journal of Manpower, Emerald Group Publishing, vol. 37(7), pages 1110-1135, October.
    5. Constant, Amelie F. & Tien, Bienvenue N., 2011. "Surviving the Turbulence Is Not Enough: Can Côte d'Ivoire Flourish Again?," IZA Policy Papers 30, Institute for the Study of Labor (IZA).
    6. Minasyan, Anna, 2016. "Your development or mine? Effects of donor–recipient cultural differences on the aid-growth nexus," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 309-325.

    More about this item

    Keywords

    FDI; Leaders' Educational level; return migration; Africa;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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