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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 2015-002, Universidad Loyola Andalucía, Department of Economics.
    • Handle: RePEc:loy:wpaper:2015-002
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    References listed on IDEAS

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    5. Muhammad Asali & Adolfo Cristobal-Campoamor & Avner Shaked, 2016. "Local human capital formation and optimal FDI," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(5), pages 691-705, August.
    6. Eicher, T-S & Kalaitzidakis, P, 1997. "The Human Capital Dimension to Foreign Direct Investment : Training, Adverse Selection and Firm Location," Discussion Papers in Economics at the University of Washington 97-03, Department of Economics at the University of Washington.
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    11. Koji Miyamoto, 2003. "Human Capital Formation and Foreign Direct Investment in Developing Countries," OECD Development Centre Working Papers 211, OECD Publishing.
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    Cited by:

    1. Muhammad Asali & Adolfo Cristobal-Campoamor & Avner Shaked, 2016. "Local human capital formation and optimal FDI," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(5), pages 691-705, August.
    2. J. Eduardo Ibarra‐Olivo & Andrés Rodríguez‐Pose, 2022. "FDI and the growing wage gap in Mexican municipalities," Papers in Regional Science, Wiley Blackwell, vol. 101(6), pages 1411-1439, December.
    3. Asali, Muhammad & Pignatti, Norberto & Skhirtladze, Sophiko, 2018. "Employment discrimination in a former Soviet Union Republic: Evidence from a field experiment," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1294-1309.
    4. Asali, Muhammad & Pignatti, Norberto & Skhirtladze, Sophiko, 2017. "Employment Discrimination in a Former Soviet Union Republic: Evidence from a Field Experiment," IZA Discussion Papers 11056, Institute of Labor Economics (IZA).
    5. Ibarra-Olivo, J. Eduardo, 2021. "Foreign direct investment and youth educational outcomes in Mexican municipalities," Economics of Education Review, Elsevier, vol. 82(C).
    6. Adolfo Cristobal Campoamor, 2015. "Job competition, employability and incentives for human capital formation," Economics Bulletin, AccessEcon, vol. 35(1), pages 550-560.

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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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