International Migration, Foreign Direct Investment, and Development Stage in Developing Economies

17 Pages Posted: 25 Apr 2019

See all articles by Ei Ei Phyo

Ei Ei Phyo

WEC (Wisdom Education Centre)

Hideaki Goto

International University of Japan - Graduate School of International Relations

Makoto Kakinaka

Hiroshima University - Graduate School for International Development and Cooperation (IDEC)

Date Written: May 2019

Abstract

The existing empirical results on the relationship between FDI and migration are rather mixed. This study reevaluates, both theoretically and empirically, how inward FDI relates to emigration in developing countries. Our model illustrates that the relationship between inward FDI and emigration flows depends on the development stage of a developing country, that is, there is a positive association between inward FDI and emigration flows for relatively less-developed countries but a negative association between these two variables for relatively developed countries. We confirm the empirical validity of our model prediction using the panel data of 21 OECD and 51 non-OECD countries during the period from 2003 to 2012. Our results argue that as economic development proceeds in a developing country, the home effect of inward FDI associated with intensified labor demand would dominate the linkage effect that induces the brain drain problem through enhancing the socioeconomic ties with migrant networks.

Keywords: development stage, income gap, international migration, inward FDI

Suggested Citation

Phyo, Ei Ei and Goto, Hideaki and Kakinaka, Makoto, International Migration, Foreign Direct Investment, and Development Stage in Developing Economies (May 2019). Review of Development Economics, Vol. 23, Issue 2, pp. 940-956, 2019. Available at SSRN: https://ssrn.com/abstract=3376860 or http://dx.doi.org/10.1111/rode.12577

Ei Ei Phyo

WEC (Wisdom Education Centre) ( email )

Tamwe, Yangon Division, 111111
Myanmar

Hideaki Goto (Contact Author)

International University of Japan - Graduate School of International Relations ( email )

777 Kokusai-Cho
Minami Uonuma Shi, Niigata-ken 949-7277
Japan

Makoto Kakinaka

Hiroshima University - Graduate School for International Development and Cooperation (IDEC) ( email )

1-5-1 Kagamiyama
Hiroshima, 739-8529
Japan

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