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Local human capital formation and optimal FDI

Author

Listed:
  • Muhammad Asali

    (Tbilisi State University)

  • Adolfo Cristóbal

    (Universidad Loyola Andalucía)

  • Avner Shaked

    (University of Bonn)

Abstract

This paper lends both theoretical and empirical support to the notion of optimal FDI levels. It does so by uncovering an inverted-U-shaped relationship between FDI and human capital formation. The optimality of a particular FDI inflow depends on the educational incentives induced by FDI on the local, heterogeneous population. Our estimates confirm the significance of a positive (linear) and a negative (non-linear) impact of FDI stocks on tertiary schooling, which are exclusively relevant in developing countries.

Suggested Citation

  • Muhammad Asali & Adolfo Cristóbal & Avner Shaked, 2015. "Local human capital formation and optimal FDI," Working Papers 2015-002, Universidad Loyola Andalucía, Department of Economics.
    • Handle: RePEc:loy:wpaper:2015-002
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    References listed on IDEAS

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    7. Muhammad Asali & Adolfo Cristobal-Campoamor & Avner Shaked, 2016. "Local human capital formation and optimal FDI," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(5), pages 691-705, August.
    8. Michel Beine & Fréderic Docquier & Hillel Rapoport, 2008. "Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers," Economic Journal, Royal Economic Society, vol. 118(528), pages 631-652, April.
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    Cited by:

    1. Muhammad Asali & Adolfo Cristobal-Campoamor & Avner Shaked, 2016. "Local human capital formation and optimal FDI," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(5), pages 691-705, August.
    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. J. Eduardo Ibarra‐Olivo & Andrés Rodríguez‐Pose, 2022. "FDI and the growing wage gap in Mexican municipalities," Papers in Regional Science, Wiley Blackwell, vol. 101(6), pages 1411-1439, December.
    4. J. Eduardo Ibarra-Olivo & Thomas Neise & Moritz Breul & Jöran Wrana, 2024. "FDI and human capital development: a tale of two Southeast Asian economies," Journal of International Business Policy, Palgrave Macmillan, vol. 7(3), pages 314-336, September.
    5. Asali, Muhammad & Pignatti, Norberto & Skhirtladze, Sophiko, 2018. "Employment discrimination in a former Soviet Union Republic: Evidence from a field experiment," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1294-1309.
    6. Adolfo Cristobal Campoamor, 2015. "Job competition, employability and incentives for human capital formation," Economics Bulletin, AccessEcon, vol. 35(1), pages 550-560.

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    More about this item

    Keywords

    FDI; Human Capital; Skills; Asymmetric Information.;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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