Education and FDI: An Insight from US Outflows

Silvio Traverso and Guido Bonatti

Journal of Social Economics, 2015, vol. 2, issue 3, 101-116

Abstract: In modern economies the movement of capital has become more and more a key element and thereby the role of Foreign Direct Investments (FDI). The literature about FDI is truly comprehensive and deepened, ranging from the relationships between FDI and other socio-economic variables to the benefits and drawbacks they may produce, as well as the determinants that can stimulate their growth. Nevertheless, despite the wide range of studies and researches, the role which education plays in relation to these investment flows seems to have been often neglected. The purpose of this study is to try to identify some preliminary evidences of a connection between FDI and the level of education. In particular, we want to test whether FDI are sensitive to the level of education of the destination countries’ labour force. In order to do that, we performed a panel regression of the United States FDI outflows from 1999 to 2012 (Bureau of Economic Analysis data), testing for the statistical significance of variables which account for the level of education on the population (and, thus, the labour force) of the receiving countries. Regressions are performed both on the entire statistical population and on two subsamples, OECD and non-OECD countries. Our results show that, on the base of our theoretical and methodological assumptions, the FDI inflows seems to be connected to the level of education of the receiving countries labour force. In particular, it seems to be true for FDI with a high content of knowledge and for OECD countries.

Keywords: Panel analysis; Foreign Direct Investment; Education level (search for similar items in EconPapers)
Date: 2015
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