The Conditional Role of Education in the FDI‐GVC Nexus: Evidence from a Global Bilateral Perspective

Jiongyi Hao ()
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Jiongyi Hao: Department of Economics, Trinity College Dublin

Economic Papers from Trinity College Dublin, Economics Department

Abstract: This paper investigates how human capital and economic development are associated with the relationship between foreign direct investment (FDI) and the participation of the global value chain (GVC). Using a bilateral panel of 76 economies from 2009 to 2020, we show that education is not uniformly associated with a greater FDI‐GVC link. Its effect depends on the stage of development: in low‐income economies, structural constraints weaken the role of education, while in higher‐income economies, tertiary education is associated with a higher FDI‐GVC relationship, consistent with greater technology absorption and upgrading. We also find that the education level of the FDI source country may matter more than that of the host country. These findings suggest that education is a complementary rather than independent driver of FDI‐GVC integration, with its benefits realized only at higher levels of development.

Keywords: FDI; Global Value Chains; Human Capital; Economic Development; Conditional Effects (search for similar items in EconPapers)
JEL-codes: C23 F14 F15 F21 F23 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2026-09
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Persistent link: https://EconPapers.repec.org/RePEc:tcd:tcduee:tep2126

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