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Education Systems and Foreign Direct Investment: Does External Efficiency Matter?

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  • Elise Wendlassida Miningou
  • Mr. Sampawende J Tapsoba

Abstract

This paper examines the effect of the efficiency of the education system on Foreign Direct Investment (FDI). First, it focuses on the external efficiency and applies a frontier-based measure as a proxy of the ability of countries to optimally convert the average years of schooling into income for individuals. Second, it shows the relationship between the external efficiency of the education system and FDI inflows by applying GMM regression technique. The results show that the efficiency level varies across regions and countries and appears to be driven by higher education and secondary vocational education. Similarly to other studies in the literature, there is no significant relationship between the average years of schooling and FDI inflows. However, this study shows that the external efficiency of the education system is important for FDI inflows. Improving the external efficiency of the education system can play a role in attracting FDI especially in non-resource rich countries, nonlandloked countries and countries in the low and medium human development groups.

Suggested Citation

  • Elise Wendlassida Miningou & Mr. Sampawende J Tapsoba, 2017. "Education Systems and Foreign Direct Investment: Does External Efficiency Matter?," IMF Working Papers 2017/079, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/079
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    Cited by:

    1. Muhammad Shahbaz & Miroslav Mateev & Salah Abosedra & Muhammad Ali Nasir & Zhilun Jiao, 2021. "Determinants of FDI in France: Role of transport infrastructure, education, financial development and energy consumption," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1351-1374, January.
    2. Asuamah Yeboah, Samuel, 2023. "Unlocking Sustainable Futures: How FDI-Driven Entrepreneurial Ecosystems Power the SDGs," MPRA Paper 118519, University Library of Munich, Germany, revised 03 Sep 2023.
    3. Tamas Szigetvari, 2018. "Eastern Europe as investment location for Turkish OFDI," IWE Working Papers 247, Institute for World Economics - Centre for Economic and Regional Studies.
    4. Chupryhin, Radzivon, 2021. "Determinants of Foreign Direct Investment in Europe: Bayesian Model Averaging in the Presence of Weak Exogeneity," MPRA Paper 107197, University Library of Munich, Germany.

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