Questions Posed: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES
Questions Posed: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES
the paper. All the questions will be reviewed and assessed in the concluding chapter.
Question 1: What are the level and type of human capital necessary for host developing
countries to attract FDI?
It is often argued that MNEs determine the choice of location based on the availability of
high level of human capital. What exactly is the level of human capital (education and
skills) that the MNEs are seeking? Do different types of MNEs seek different sets of
skills, or are there minimal levels of human capital commonly acknowledged without
which it is difficult to attract even the least skill-intensive MNEs?
Question 2: What are MNEs and domestic firms doing in terms of human capital
formation? What are the correlates and determinants of training activities?
After host countries successfully attract FDI, the next step is to have MNEs participate in
improving the level of human capital of their workers as well as employees in other
domestic firms. Case studies and firm surveys can be used to address: i) incidence,
intensity, and the type of training activities performed by MNEs and domestic firms;
ii) beneficiaries of training; iii) source of finance for training; and iv) the type of MNEs that
are more likely to train?
Question 3: How does human capital formation of MNEs contribute to technology
transfers?
One of the key motivations for the host countries to attract MNEs is to enjoy technology
transfers. Is there any strong evidence of technology transfers in developing countries?
What are the underlying conditions for such transfers to occur?
Question 4: What has been the role of government policies within the linkages between
human capital formation and FDI? What are the good practices? What are
the tentative policy conclusions?
After clarifying all the information surrounding the linkage between FDI and human
capital formation, we address the most important question in this paper: which policies
work and which do not? In doing so, past policy attempts will be assessed to identify
tentative policy conclusions.
Question 5: Is there any evidence of a virtuous circle of human capital formation and
increased inflow of MNEs? What is the role of policy to facilitate the virtuous
circle?
Perhaps the ultimate scenario for the host country is to attain the virtuous circle where
improvements in the level of human capital lead to more incoming MNEs, and improved
training and technology spillovers from MNEs lead to a further increase in the human
capital which leads to more incoming MNEs. Although it may be too early to assess the
extent/mechanism for this circle to occur, we gather all possible evidence to identify the
underlying conditions.
OECD DEVELOPMENT CENTRE
Working Paper No. 211
HUMAN CAPITAL FORMATION
AND FOREIGN DIRECT INVESTMENT
IN DEVELOPING COUNTRIES
by
Koji Miyamoto
Questions Posed HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES - To learn more about this author, visit OECD Development Centre's Website.
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The following lists key policy questions on HRD and FDI to be tackled throughout
the paper. All the questions will be reviewed and assessed in the concluding chapter.
Question 1: What are the level and type of human capital necessary for host developing
countries to attract FDI?
It is often argued that MNEs determine the choice of location based on the availability of
high level of human capital. What exactly is the level of human capital (education and
skills) that the MNEs are seeking? Do different types of MNEs seek different sets of
skills, or are there minimal levels of human capital commonly acknowledged without
which it is difficult to attract even the least skill-intensive MNEs?
Question 2: What are MNEs and domestic firms doing in terms of human capital
formation? What are the correlates and determinants of training activities?
After host countries successfully attract FDI, the next step is to have MNEs participate in
improving the level of human capital of their workers as well as employees in other
domestic firms. Case studies and firm surveys can be used to address: i) incidence,
intensity, and the type of training activities performed by MNEs and domestic firms;
ii) beneficiaries of training; iii) source of finance for training; and iv) the type of MNEs that
are more likely to train?
Question 3: How does human capital formation of MNEs contribute to technology
transfers?
One of the key motivations for the host countries to attract MNEs is to enjoy technology
transfers. Is there any strong evidence of technology transfers in developing countries?
What are the underlying conditions for such transfers to occur?
Question 4: What has been the role of government policies within the linkages between
human capital formation and FDI? What are the good practices? What are
the tentative policy conclusions?
After clarifying all the information surrounding the linkage between FDI and human
capital formation, we address the most important question in this paper: which policies
work and which do not? In doing so, past policy attempts will be assessed to identify
tentative policy conclusions.
Question 5: Is there any evidence of a virtuous circle of human capital formation and
increased inflow of MNEs? What is the role of policy to facilitate the virtuous
circle?
Perhaps the ultimate scenario for the host country is to attain the virtuous circle where
improvements in the level of human capital lead to more incoming MNEs, and improved
training and technology spillovers from MNEs lead to a further increase in the human
capital which leads to more incoming MNEs. Although it may be too early to assess the
extent/mechanism for this circle to occur, we gather all possible evidence to identify the
underlying conditions.
OECD DEVELOPMENT CENTRE
Working Paper No. 211
HUMAN CAPITAL FORMATION
AND FOREIGN DIRECT INVESTMENT
IN DEVELOPING COUNTRIES
by
Koji Miyamoto
Questions Posed HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES - To learn more about this author, visit OECD Development Centre's Website.
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