Title: Accounting for quality differences in human capital and foreign direct investment
Abstract: AbstractThis paper empirically investigates how cross-country differences in the quality of human capital, as they are captured by the conventional measures of international test score differences, influences the patterns of foreign direct investment. Using panel data covering 32 countries during the period between 1985 and 2004, this paper finds that a host country's quality of educational attainment plays an independent role in attracting foreign direct investment. In particular, the quality of human capital influences horizontal foreign direct investment, even after accounting for the roles of skill and factor endowments, trade costs, investment costs, and country-size and income effects.Keywords: labor skillsinternational test scoreshorizontal FDIvertical FDIJEL Classification: F21F23J24O15 AcknowledgementsI especially thank Murat Iyigun for his guidance and encouragement on this paper. For valuable comments and suggestions, I also thank Wolfgang Keller, Keith Maskus, James Markusen, Martin Boileau, Youngho Kang and two anonymous referees. All remaining errors are mine alone.
Publication Year: 2014
Publication Date: 2014-03-14
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 8
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