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Migration and Foreign Direct Investment: Education Matters

Author

Listed:
  • Masood Gheasi

    (VU University Amsterdam)

  • Peter Nijkamp

    (VU University Amsterdam)

  • Piet Rietveld

    (VU University Amsterdam)

Abstract

The rapid growth in the foreign-born population in many high and middle-income countries in recent decades has prompted much research on the socio-economic determinants and impacts of immigration. This paper investigates the relationship between the stock of foreign population by nationality living in the UK and the bilateral volume of foreign direct investment (FDI), both inward FDI into the UK and outward FDI from the UK. This study contributes to the literature on the above-mentioned association between migration and FDI, by using the UK annual data from 2001 to 2007 for 22 countries on the inward volume of FDI and for 27 countries on the outward volume of FDI. Our study finds a significant and positive relationship between migration and outward FDI. This result also holds, if we correct for endogeneity by using an instrumental variable approach. If we then include the education level of migrants living in the UK, our results indicate that the more educ ated migrants from a certain country are, the stronger positive effect they have on FDI in both directions (inward and outward).

Suggested Citation

  • Masood Gheasi & Peter Nijkamp & Piet Rietveld, 2011. "Migration and Foreign Direct Investment: Education Matters," Tinbergen Institute Discussion Papers 11-136/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20110136
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    References listed on IDEAS

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    Cited by:

    1. Akinori Tomohara, 2017. "How does immigration affect modes of foreign market access: trade and FDI?," Applied Economics Letters, Taylor & Francis Journals, vol. 24(18), pages 1280-1284, October.
    2. Tomohara, Akinori, 2017. "Does immigration crowd out foreign direct investment inflows? Tradeoff between contemporaneous FDI-immigration substitution and ethnic network externalities," Economic Modelling, Elsevier, vol. 64(C), pages 40-47.
    3. Jayet, H. & Marchal, L., 2016. "Migration and FDI: Reconciling the standard trade theory with empirical evidence," Economic Modelling, Elsevier, vol. 59(C), pages 46-66.
    4. Kourtit Karima & Nijkamp Peter & Suzuki Soushi, 2016. "New Urban Economic Agents: A Comparative Analysis of High-Performance New Entrepreneurs," Quaestiones Geographicae, Sciendo, vol. 35(4), pages 5-22, December.
    5. Peter Nijkamp & Masood Gheasi & Piet Rietveld, 2011. "Migrants and International Economic Linkages: A Meta-Overview," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(4), pages 359-376, July.
    6. Jacques Poot, 2015. "Cross-border migration and travel: A virtuous relationship," IZA World of Labor, Institute of Labor Economics (IZA), pages 209-209, November.
    7. Paul Comolli, 2018. "Migration, FDI, and Welfare," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 46(2), pages 179-188, June.
    8. Cuadros, Ana & Martín-Montaner, Joan & Paniagua, Jordi, 2016. "Homeward bound FDI: Are migrants a bridge over troubled finance?," Economic Modelling, Elsevier, vol. 58(C), pages 454-465.
    9. Luigi Benfratello & Davide Castellani & Anna D’Ambrosio, 2019. "Migration and the Location of MNEs Activities. Evidence from Italian Provinces," John H Dunning Centre for International Business Discussion Papers jhd-dp2019-04, Henley Business School, University of Reading.
    10. Tomohara, Akinori, 2016. "Japan's tourism-led foreign direct investment inflows: An empirical study," Economic Modelling, Elsevier, vol. 52(PB), pages 435-441.
    11. Masood Gheasi & Peter Nijkamp, 2017. "A Brief Overview of International Migration Motives and Impacts, with Specific Reference to FDI," Economies, MDPI, Open Access Journal, vol. 5(3), pages 1-11, August.
    12. TOMOHARA Akinori, 2015. "Effectively Opening Labor and Capital Markets: The interplay among foreign direct investment, trade, and immigration," Discussion papers 15079, Research Institute of Economy, Trade and Industry (RIETI).
    13. Xu, Xu & Sylwester, Kevin, 2016. "The effects of foreign direct investment on emigration: The roles of FDI source country, education, and gender," Economic Modelling, Elsevier, vol. 55(C), pages 401-409.
    14. Cuadros, Ana & Martín-Montaner, Joan & Paniagua, Jordi, 2019. "Migration and FDI: The role of job skills," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 318-332.

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    More about this item

    Keywords

    foreign direct investment; immigration; gravity model; instrumental variable;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • P45 - Economic Systems - - Other Economic Systems - - - International Linkages

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