While training is no doubt the major source of HRD activities undertaken by the MNEs, they can also contribute to the HRD of host developing countries by mobilising formal education. One of the MNEs that has invested substantially in formal education is Intel. They have invested in curriculum, educational equipment, infrastructure and technical support to almost all countries where they have production facilities, including Argentina, Brazil, Costa Rica, China, Malaysia, South Korea, India, Russia, Poland, Ireland and South Africa.
For example, in China, Intel has supported tertiary education through effective curriculum development and research. Working closely with the Chinese academia, Intel has participated in joint research projects, facilitated technology development, and provided scholarships. In Costa Rica, Intel has assisted all levels of formal education in their Robotics Programme by providing training workshops for teachers, curriculum development, and providing equipment and materials. Their collaboration with the tertiary education sector includes technical assistance to the engineering curriculum and equipment supply to the University of Costa Rica and the Costa Rica Technology.
Another example of MNE participation in education is Toyota Motors Corporation in Indonesia. Toyota decided to collaborate with ASTRA foundation and created the Toyota-ASTRA foundation with the aim of supporting HRD through education, training and R&D. Recent programmes include scholarships to students at all levels of formal education, but in particular for children from poor families; educational materials and equipment to schools and universities; and research grants to universities and research institutions.
What are the motivations for MNEs to support formal education? Is it out of charity or to gain good publicity, which may well make sense under the recently growing hostility towards the MNEs? Does recently growing awareness of corporate social responsibility help in supporting MNE investment in human capital? Moreover, are there economic benefits for MNEs to invest in education? One economic benefit that MNEs may gain is the possibility to hire graduates from the educational institutions that MNEs are supporting. In other words, if it is more cost efficient to invest in formal schooling rather than providing in-house enterprise training, MNEs’ investment in formal education can be justified. However, it is not clear if the graduates will end up working for the MNEs that had financed part of the education. To the extent that the type of skills funded by MNEs are most likely related to the skills relevant for the MNEs themselves or for their suppliers and distributors, most of the students are likely to be employed in firms with at least some backwards or forwards linkages to the MNEs. To verify these hypotheses, tracer studies of graduates of MNE-funded educational institutions are necessary.
One interesting example of services sector MNEs that have direct links to educational institutions are Universities and Business schools in the US and Europe. In fact, this is a special case of MNEs supporting HRD of host developing countries by themselves being the provider of education services. Examples of these include Harvard Business School in the US, INSEAD in France and the Stockholm School of Economics, all of which have school branches around the world including the developing countries.
Singapore is one of the popular places where foreign educational institutions are located.
Recent efforts by governments to further attract and expand educational services MNEs is the World Class Universities Programme, which aims to attract at least 10 world class education institutions. Today eight top American and European schools with strong linkages to industry conduct advanced postgraduate education and R&D programmes in business, management, engineering and applied sciences. Although some of the participants of these educational programmes may be non-Singaporean who may not stay in the country after graduation, these educational services MNEs are expected to contribute to HRD by fostering R&D and supplying high-skilled graduates to the fastgrowing industry.
OECD DEVELOPMENT CENTRE Working Paper No. 211 HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES by Koji Miyamoto
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