Tweet

Human Capital Formation by MNEs and Domestic Firms: Determinants of Enterprise Training

Written by: OECD Development Centre

Article Overview: It is a general understanding that firms in general underinvest in training in both developing and developed countries (Batra and Tan, 2002; OECD, 2003; OECD, forthcoming).

Human Capital Formation by MNEs and Domestic Firms: Determinants of Enterprise Training

It is a general understanding that firms in general underinvest in training in both
developing and developed countries (Batra and Tan, 2002; OECD, 2003; OECD,
forthcoming). Among the few surveys that cover enterprise training in the developing
countries, the World Business Environment Survey (WBES) provides some information
about cross-country comparison in training incidence. It shows that on average, 60 per
cent of firms in both East Asia and Latin America and the Caribbean (LAC) regions
conduct some formal training (Batra and Tan, 2002; Batra, 2003). However, there are
wide variations in the incidence of formal training, which ranges from 65 to 75 per cent in
China, the Philippines, and Singapore to 30 per cent in Malaysia. Another set of
enterprise surveys that compared training incidences in Indonesia, Malaysia, Chinese
Taipei, Columbia, and Mexico in the early 1990s25 also confirm large variances, with high
performing countries such as Columbia (50 per cent) and Malaysia (35 per cent) to low
performing countries such as Indonesia (19 per cent), Chinese Taipei (9 per cent) and
Mexico (11 per cent).

What are the sources of training? WBES distinguishes between formal in-house
training provided by the employer, and formal training provided by external public/private
training institutions. It indicates that formal in-house training is the major source of
training provided by firms in both East Asia and LAC regions, accounting for 40 per cent
in East Asia and 50 per cent in the LAC. Among firms that use outside training sources,
most firms in both regions appear to rely on private training institutions.
Underinvestment in training that is relatively unequally distributed is a disturbing
evidence when host developing countries are trying to catch up with the skills level of the
industrialised economies and enterprise training is one of the most important sources of
skills acquisition. Indeed many studies have shown that enterprise training raises labour
productivity substantially. Empirical studies show that productivity gains of training range
from about 50 to 75 per cent in Indonesia, Nicaragua and Guatemala, to about 30-45 per
cent in Mexico, Malaysia and Colombia (Tan and Batra, 1996; Batra, 2003). These
productivity gains are even stronger for small- and medium-sized firms (World Bank,
1997). Before describing policy measures to tackle these training problems, the literature
on training determinants is assessed to identify the reason behind this underinvestment.

OECD DEVELOPMENT CENTRE
Working Paper No. 211
HUMAN CAPITAL FORMATION
AND FOREIGN DIRECT INVESTMENT
IN DEVELOPING COUNTRIES
by
Koji Miyamoto

Related Articles
  Questions Posed: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES
  Do MNEs Train More than Domestic Firms?
  HUMAN CAPITAL FORMATION BY MNES AND TECHNOLOGY TRANSFERS
  Summary: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES
  Introduction: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES

Article Tags: batra, business environment, chinese taipei, country comparison, cross country, developed countries, developing countries, east asia, environment survey, incidences, indonesia malaysia, industrialised economies, labour productivity, latin america, oecd, private training, skills acquisition, training institutions, variances, world business



Related Forum Posts
HRPreneur - Hi everyone, I am new to the forum and I recently started my own Human Capital (HR) consulting firm called HRPreneur Inc. HRP focuses on making human capital a strategic differentiator for SME's. Below is a summary about HRP; Who We Are: HRP is a Human Capital consulting firm with 30 years of experience that becomes an extension of your company by providing a full array of services to help you create a highly engaged workforce focused on achieving strategic results in order to build a long lasting great company! Mission: HRP provides small and medium sized businesses a Strategic HR Business Partner to increase employee engagement, resulting in cost savings, increased productivity and results at an affordable rate! Vision: To inspire and warrant SME's reach their full competency! Cost Effectiveness: We provide over 30 years of experience at a fraction of the cost at a strategic executive HR business level You will save between 50% to 60% in costs per year on salary, bonus, benefits, training, office space alone We will provide you additional cost efficiencies through our services Services: • Strategic Human Resources Planning • Organizational Redesign • Change Management • Organizational Culture Development • Employee Engagement Programs • Leadership Assessment and Development • Compensation Design • Talent Acquisition • Assimilation and On-Boarding • Performance Management • Talent Management & Succession Planning • Human Resources Due Diligence • Human Resources Audit • Full Service HR Outsourcing
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
7 words or less for Structogram - Some "7 words or less" (more or less) for Structogram for your comments: Training to get your message across(6) Secrets to get your message across (6) Training so people will listen to you (7) Helping you get your message across (6) Training to learn to get your message across (8) Communications training for yourself and your team (7)
Del Castienne - International Business and Project Brokers - In addition to the above, Del Castienne is an international brokerage firm specializing in various entrepreneural services. Del Castienne is more than just a brokerage, as we facilitate Private International Venture Capital for Business and Projects from Commodity Speculation Transactions, MBO, MBI, M&A, Bridging Finance, Patents, Branding, JV, Corporate Advisory Services, Business Plan Development, etc.. Del Castienne is linked to 1200 private international Venture Capital consortiums and Funding Syndicates with a funding capacity of $ 115 billion and 5000 international Investment Bankers and Business & Project Brokers. This in itself should provide you with a gateway to the best source of funding in the world. Through Del Castienne any entrepreneur can have up to a potential success rate of 25% (conditions apply) with absolutely no up front costs. Del Castienne charges a maximum of 5% commission which is far below the international standard of 10% - 12% on project value. If you are tired of running back and forth with countless dissappointments, please give us an opportunity to assist you. Our minimum Venture Capital amount is $1 million and we a Commitment Letter can be provided with in 30 days after formalities are in place and your information was received.
Seek Venture Capital & Funding - Hello, Greetings from India. I am Seeking Venture Capital for Offshore Software Company Start-up. Need advise along with Business Model Sample. I have a basic outline for an offshore company. 1. Technology - like Microsoft Dot Net, Java, LAMP 2. Talent Team - Found Good Technology Developers. 3. Where I can get the leads/potential customers - Leads have been identified who are willing to move forward offshore projects. 4. I do not have resources like funding. It is a very critical factor to me Industries: Manufacturing, Real Estate, Retail, Insurance, Distribution & Logistics, Healthcare, Industry Associations and Software Product Development, Agricultural Industries and Etc. Services: Offshore Software Development Company. Offices to be located: Hyderabad, Andhra Pradesh, India and USA. Products/Services/Applications in areas like POS & Billing, Sales & Distribution, Production Planning, Material Management, Inventory Control, Plant Maintenance, Purchasing, Accounting and Logistics. Dynamic Web Programming with Database Driven Content Management Systems, Online Stores for E-Commerce, B2B Solutions, Community Portals, Website Redesign and Development, Custom ERP with Enterprise Wide Functional Modules such as Marketing, CRM, Accounting, Inventory Control, Sales & Distribution, Production Planning, Purchase & Stores, Logistics and Supply Chain. Seek your further questions and help. Thank you, Best Regards, Jayapratap.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

10 Steps to a Great Support Team

Environment and productivity at the office

Unspoken Yet Important Rules for Book Proposals

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.