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FDI, the Brain Drain and Trade: Channels and Evidence

  • Artjoms Ivlevs
  • Jaime de Melo

This paper explores the links between the patterns of migration (high vs. low-skill), trade policy, and foreign direct investment (FDI) from the standpoint of sending countries. A skeleton general equilibrium model with a non-traded good and sector-specific labour is used to explore the effects of the skill-composition of exports on FDI. The model suggests that if exports are low-skill intensive, emigration of high- skill labour leads to positive FDI, suggesting that migration and FDI are complements. Cross-sectional analysis using FDI and emigration data for 103 migration-sending countries over the period 1990-2000 finds some support for this conjecture.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 08/40.

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Handle: RePEc:not:notgep:08/40
Contact details of provider: Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
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