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Skilled Migration, FDI and Human Capital Investment

Daniele Checchi (), Gianfranco De Simone () and Riccardo Faini

No 2795, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: It is commonly believed that accumulation of human capital (HC) and availability of physical and financial capitals are among the major determinants of economic growth. In a globalised world, where factors of production are increasingly mobile, the process of domestic accumulation of HC might be affected in several ways through migration and capital inflows. Furthermore, endowment of skilled labour and foreign direct investments (FDI) may reinforce each other through possible “complementary effects”. Our paper aims to advance the existing empirical literature on the relationship between international factor mobility and domestic accumulation of HC in developing countries. We provide new evidence on how the presence of foreign firms in the domestic economy and the emigration of skilled workers impact the domestic school enrolment. We also investigate whether existing supply of skilled labour is a significant determinant of inward flows of foreign capital. The interdependence between factor mobility and HC accumulation supports some simple back-of-the-envelop calculations aiming to investigate the presence of a virtuous (vicious) circle between HC accumulation and FDI inflows.

Keywords: human capital investment; factor mobility; FDI; brain drain/gain; complementarity effects; developing countries (search for similar items in EconPapers)
JEL-codes: F22 F23 O15 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2007-05
New Economics Papers: this item is included in nep-dev, nep-hrm and nep-mig
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Working Paper: Skilled Migration, FDI and Human Capital Investment (2007) Downloads
Working Paper: Skilled Migration, FDI and Human Capital Investment (2007) Downloads
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