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The role of Foreign Direct Investment in higher education in the developing countries (Does FDI promote education?)

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  • Mazhar Mughal

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

  • Natalia Vechiu

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

Abstract

This paper studies the impact of FDI inflows on higher education in developing countries for the period 1998-2008. A large panel of developing countries is analyzed using different econometric techniques and specifications. We find evidence of short-term negative effect of the FDI on tertiary education measured by school enrolment. The negative effect of FDI is confirmed for both secondary and tertiary education when measured as the adult population having acquired the level. Among other control variables, GDP, demographic growth and the services sector value added seem to have a significant impact on higher education. GDP and services value-added show the expected positive impact, while population growth appears to affect education enrollment and attainment negatively. The study highlights the need for considering the differential aspects of foreign investments' nature and characteristics, rather than treating them as a cure-all pill for the developing countries' development problem.

Suggested Citation

  • Mazhar Mughal & Natalia Vechiu, 2011. "The role of Foreign Direct Investment in higher education in the developing countries (Does FDI promote education?)," Working papers of CATT hal-01885159, HAL.
    • Handle: RePEc:hal:wpcatt:hal-01885159
    Note: View the original document on HAL open archive server: https://hal-univ-pau.archives-ouvertes.fr/hal-01885159
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    Cited by:

    1. Farid Makhlouf & Mazhar Mughal, 2013. "Remittances, Dutch Disease, And Competitiveness: A Bayesian Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(2), pages 67-97, June.
    2. Ibarra-Olivo, J. Eduardo, 2021. "Foreign direct investment and youth educational outcomes in Mexican municipalities," Economics of Education Review, Elsevier, vol. 82(C).
    3. Farid Makhlouf & Mazhar Yasin Mughal, 2013. "Remittances, Dutch Disease, and Competitiveness: a Bayesian Analysis," Post-Print hal-01884858, HAL.

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    More about this item

    Keywords

    FDI; Education; Human capital; Developing countries;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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