Foreign Direct Investment and Country‐Specific Human Capital

13 Pages Posted: 30 Nov 2012

See all articles by Jinyoung Kim

Jinyoung Kim

Korea University - Department of Economics

Jungsoo Park

Sogang University

Date Written: January 2013

Abstract

This paper exploits an international bilateral data set over the period 1963–1998 to investigate the relationship between foreign direct investment (FDI) and foreign‐educated labor in an FDI host country. Workers educated abroad acquire country‐specific human capital that is more productive in the host country of study. A foreign subsidiary sharing a parent firm's technology will invest more if it has more foreign‐educated labor, since it can utilize this labor more productively because of the country‐specific human capital. Consistent with our predictions, our empirical findings show that foreign‐educated labor accounted for a sizable portion of growth in FDI flows.

JEL Classification: F21, F10

Suggested Citation

Kim, Jinyoung and Park, Jungsoo, Foreign Direct Investment and Country‐Specific Human Capital (January 2013). Economic Inquiry, Vol. 51, Issue 1, pp. 198-210, 2013. Available at SSRN: https://ssrn.com/abstract=2183013 or http://dx.doi.org/10.1111/j.1465-7295.2012.00478.x

Jinyoung Kim (Contact Author)

Korea University - Department of Economics ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea

Jungsoo Park

Sogang University ( email )

35 Baekbeom-ro
Seoul, 121-742

HOME PAGE: http://hompi.sogang.ac.kr/parkjs

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