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HUMAN RESOURCE DEVELOPMENT AND ATTRACTING INWARD FDI
Written by: OECD Development CentreArticle Overview: One of the characteristics of rich industrial economies is the availability of a workforce with a high level of human capital. Whether human capital has been the key driver of economic prosperity or vice-versa is still a matter of debate. Nevertheless, long time series trends in educational attainment and economic growth during the last century indicate that HRD and economic prosperity went hand in hand10. Some developing countries followed similar trends in human capital and economic growth. What was distinctive about these developing countries is that they appeared to have realised large economic benefits in attracting MNEs into host economies, and have thus mobilised inward FDI to attain rapid economic growth.
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Free Download - BIBLIOGRAPHY - E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES By OECD Development Centre |
HUMAN RESOURCE DEVELOPMENT AND ATTRACTING INWARD FDI
One of the characteristics of rich industrial economies is the availability of a
workforce with a high level of human capital. Whether human capital has been the key
driver of economic prosperity or vice-versa is still a matter of debate. Nevertheless, long
time series trends in educational attainment and economic growth during the last century
indicate that HRD and economic prosperity went hand in hand10. Some developing
countries followed similar trends in human capital and economic growth. What was
distinctive about these developing countries is that they appeared to have realised large
economic benefits in attracting MNEs into host economies, and have thus mobilised
inward FDI to attain rapid economic growth.
How do host developing countries attract FDI? Figure I.1 indicates the importance
of an attractive investment climate and sound policy environment in order for host
developing countries to successfully attract FDI. Investment climate includes
availability/quality of factors of production, market size/access, logistic costs and
numerous socio-political environments conducive for doing business with minimal risk.
Past experiences of countries that have successfully attracted FDI indicate that many of
these factors were indispensable. Among these, the level of human capital has been a
crucial factor that MNEs, especially the high value-added MNEs, were seeking when
determining the new location of operation. This has recently become even more crucial
as the mode of MNE production is becoming relatively skill-biased with an increasing
number of high-technology manufacturing and services MNEs seeking labour force
equipped with knowledge in engineering, technology, organisational skills and business
administration.
This section evaluates host developing country efforts to develop human capital to
attract inward FDI. The aim is to determine the following:
— Is human capital essential for attracting any type of FDI?
— What are the level and type of human capital necessary to attract FDI?
Both questions have become increasingly important but at the same time difficult
to tackle since the type and the mode of FDI have changed dramatically during the past
two decades and host countries are striving to upgrade/adapt their human capital as well
as other key host country environments. The following evaluates empirical evidence on
the role of HRD on inward FDI, and assesses policy experiences to mobilise HRD.
OECD DEVELOPMENT CENTRE
Working Paper No. 211
HUMAN CAPITAL FORMATION
AND FOREIGN DIRECT INVESTMENT
IN DEVELOPING COUNTRIES
by
Koji Miyamoto
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About the Author: OECD Development Centre RSS for OECD's articles - Visit OECD's website Created in 1962 by the Organisation for Economic Co-operation and Development (OECD) in Paris, the Development Centre is an interface between OECD Member countries and the emerging and developing economies. The Development Centre occupies a unique place within the OECD and in the international community. It is a forum where countries come to share their experience of economic and social development policies. The Centre contributes expert analysis to the development policy debate. The objective is to help decision makers find policy solutions to stimulate growth and improve living conditions in developing and emerging economies. Click here to visit OECD's website Human Capital Formation by MNEs Supporting Formal Education Questions Posed HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES Restricted Access to Finance Policies to Develop Human Resources Empirical Evidence Does Human Capital Matter |
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