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Skilled Migration, FDI and Human Capital Investment

  • Checchi, Daniele

    ()

    (University of Milan)

  • De Simone, Gianfranco

    ()

    (Fondazione Giovanni Agnelli)

  • Faini, Riccardo

    (University of Rome Tor Vergata)

It is commonly believed that accumulation of human capital (HC) and availability of physical and financial capitals are among the major determinants of economic growth. In a globalised world, where factors of production are increasingly mobile, the process of domestic accumulation of HC might be affected in several ways through migration and capital inflows. Furthermore, 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 aiming to investigate the presence of a virtuous (vicious) circle between HC accumulation and FDI inflows.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2795.

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Length: 32 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2795
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  1. Grossman, Michael, 2006. "Education and Nonmarket Outcomes," Handbook of the Economics of Education, Elsevier.
  2. Faini, Riccardo, 2004. "Trade Liberalization in a Globalizing World," IZA Discussion Papers 1406, Institute for the Study of Labor (IZA).
  3. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1998. "Human capital depletion, human capital formation, and migration: a blessing or a "curse"?," Economics Letters, Elsevier, vol. 60(3), pages 363-367, September.
  4. William Carrington & Enrica Detragiache, 1998. "How Big is the Brain Drain?," IMF Working Papers 98/102, International Monetary Fund.
  5. Daniele Checchi, 1999. "Inequality in Incomes and Access to Education. A Cross-Country Analysis (1960-95)," Development Working Papers 125, Centro Studi Luca d\'Agliano, University of Milano.
  6. Bruce A. Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," NBER Working Papers 11299, National Bureau of Economic Research, Inc.
  7. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A Brain Gain with a Brain Drain," Economics Series 45, Institute for Advanced Studies.
  8. José Luis Groizard & Joan Llull, 2006. "Skilled migration and growth. Testing brain drain and brain gain theories," DEA Working Papers 20, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  9. Frédéric Docquier & Elisabetta Lodigiani, 2008. "Skilled migration and business networks," CREA Discussion Paper Series 08-11, Center for Research in Economic Analysis, University of Luxembourg.
  10. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February.
  11. Fabio, MARIANI, 2004. "Brain Drain, Inequality and Growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004033, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  12. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-63, July.
  13. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
  14. Docquier, Frederic & Marfouk, Abdeslam, 2004. "Measuring the international mobility of skilled workers (1990-2000) : release 1.0," Policy Research Working Paper Series 3381, The World Bank.
  15. Sapir, André, 2000. "Who is Afraid of Globalization? The Challenge of Domestic Adjustment in Europe and America," CEPR Discussion Papers 2595, C.E.P.R. Discussion Papers.
  16. Koji Miyamoto, 2003. "Human Capital Formation and Foreign Direct Investment in Developing Countries," OECD Development Centre Working Papers 211, OECD Publishing.
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