Foreign direct investment and human capital in developing countries: a panel data approach
Journal Publication ResearchOnline@JCUAbstract
Theoretical studies have shown that there is a direct relationship between human capital and foreign direct investment (FDI). However, only a few available empirical studies have attempted to investigate this relationship simultaneously. Using country level panel data from 55 developing countries over the 1980–2011 period, this paper examines the interrelationship between FDI and human capital. Statistical analysis, based on simultaneous equations fixed effect estimation, reveals significant bi-directional causality between human capital and FDI, which suggests that FDI and human capital development policies need to be coordinated. FDI-led economic growth models may not be entirely suitable for all developing countries aiming to replicate the economic success of countries such as Brazil and China unless attention is also paid to human capital development through increased spending on education and training.
Journal
Economic Change and Restructuring
Publication Name
Economic Change and Restructuring
Volume
50
ISBN/ISSN
1574-0277
Edition
N/A
Issue
4
Pages Count
25
Location
N/A
Publisher
Springer
Publisher Url
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Publisher Location
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Publish Date
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Url
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Date
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EISSN
N/A
DOI
10.1007/s10644-016-9191-0