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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 0002, Universidad Loyola Andalucía, Department of Economics.
    • Handle: RePEc:loy:wpaper:0002
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    File URL: http://loyolaandnews.es/loyolaecon/wp-content/uploads/2016/01/inversion-extranjera-y-formacion-capital-humano.pdf
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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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