Local human capital formation and optimal FDI |
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| Authors: | Muhammad Asali Adolfo Cristobal-Campoamor Avner Shaked |
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| Affiliation: | 1. International School of Economics, Tbilisi State University, Tbilisi, Georgia and IZA, Bonn, Germany;2. Department of Economics, Universidad Loyola Andalucía, Seville, Spain;3. Department of Economics, University of Bonn, Bonn, Germany |
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| Abstract: | This paper lends both theoretical and empirical support to the notion of optimal foreign direct investment (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. |
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| Keywords: | Foreign direct investment human capital skilled labour information |
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