As shown in section II.2, services sector FDI has been a growing area in the past 15 years. Since the service sector FDI, in general, involves high value-added MNEs that possess knowledge and technology, host developing countries may want to mobilise their human resources so as to attract these types of MNEs. While not all servicesrelated MNEs require high-skilled workers, some of the growing services-related MNEs do actually require a high-skilled workforce. They include MNEs operating in the area of financial services, information technology, telecommunication, pharmaceutical, medical, as well as firms that locate regional headquarters in the host country.
The common feature among these services-related MNEs is that they require strong business support linkages and global connectivity. This calls for a highly-skilled workforce that could handle business administration and management as well as computing and information and technology.
One good example of a rapidly growing services sector is regional headquarters.
Singapore is a country that has successfully attracted a large number of corporate headquarters and is now a key hub in Asia. More than 60 per cent of the 6 000 foreign companies now based in Singapore have regional responsibilities and headquarters functions23. With a sufficient supply of computer-literate English-speaking workers with tertiary education, as well as other key factors such as sound logistics, financial infrastructure, and tax incentives, more corporate headquarters are likely to be based in Singapore in the future.
Summary To sum up, empirical evidence indicates that human capital is important for attracting FDI, and that host developing countries need, at least, a minimum of basic schooling for all adult population to show that their country has a sound investment climate to potential MNEs. Countries that seek high value-added MNEs in hightechnology manufacturing and services need to develop the tertiary education sector further. This calls for HRD policies that secure access and quality of basic schooling. To formulate effective demand-driven HRD policies, it is necessary to have industries and IPAs participate in policy making as well as the delivery of educational services.
OECD DEVELOPMENT CENTRE Working Paper No. 211 HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES by Koji Miyamoto
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