Does human capital endowment of foreign direct investment recipient countries really matter? evidence from cross-country firm level data

Sumon Kumar Bhaumik, Ralitza Dimova*

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

The stylized literature on foreign direct investment (FDI) suggests that developing countries should invest in the human capital of their labor force in order to attract FDI. However, if educational quality in developing country is uncertain such that formal education is a noisy signal of human capital, it might be rational for multinational enterprises to focus more on job-specific training than on formal education of the labor force. Using cross-country data from the textiles and garments industry, we demonstrate that training indeed has a greater impact on firm efficiency in developing countries than formal education of the workforce.

Original languageEnglish
Pages (from-to)559-570
Number of pages12
JournalReview of development economics
Volume17
Issue number3
Early online date17 Jul 2013
DOIs
Publication statusPublished - Aug 2013

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foreign direct investment
human capital
direct investment
foreign investment
textile industry
recipient
developing world
developing country
education
firm
labor force
garment industry
multinational enterprise
evidence
efficiency
labour force

Bibliographical note

This is the peer reviewed version of the following article: Bhaumik, S. K., & Dimova, R. (2013). Does human capital endowment of foreign direct investment recipient countries really matter? evidence from cross-country firm level data. Review of development economics, 17(3), 559-570, which has been published in final form at http://dx.doi.org/10.1111/rode.12050. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.

Cite this

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Does human capital endowment of foreign direct investment recipient countries really matter? evidence from cross-country firm level data. / Bhaumik, Sumon Kumar; Dimova, Ralitza.

In: Review of development economics, Vol. 17, No. 3, 08.2013, p. 559-570.

Research output: Contribution to journalArticle

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