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Summary: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES
Written by: OECD Development CentreArticle Overview: This paper synthesises the existing literature on human capital formation and foreign direct investment (FDI) in developing countries.
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Free Download - BIBLIOGRAPHY - E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES By OECD Development Centre |
Summary: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES
This paper synthesises the existing literature on human capital formation and
foreign direct investment (FDI) in developing countries. The aim is to take a bird’s eye
view of the complex linkages between the activities of multinational enterprises (MNEs)
and policies of host developing countries. In doing so, general trends, best practices and
policy experiences are extracted to evaluate the current state of knowledge. The
literature indicates that a high level of human capital is no doubt one of the key
ingredients for attracting FDI, as well as for host countries to gain maximum benefits
from their activities. Most developing countries, however, underinvest in human capital,
and the investment that is actually taking place is unevenly distributed across countries
and regions that have adopted different human resource development (HRD) policies. To
improve human capital formation and thus to attract more FDI would therefore require a
more coherent approach that takes host country constraints such as limited budgetary
resources into account. One such approach is to provide strong incentives for MNEs and
Investment Promotion Agencies (IPAs) to participate in formal education and vocational
training even for workers employed by domestic firms. This allows HRD to be flexible and
demand-driven. Another policy option is to facilitate HRD for small- and medium-sized
domestic enterprises which usually do not invest sufficiently in training of employees
although these enterprises stand to gain most from education and training. In addition,
FDI promotion policies can target high value-added MNEs that are more likely to bring
new skills and knowledge to the economy that can be tapped by domestic enterprises.
Lastly, it is important that key components of HRD policies, i.e. formal schooling and
vocational education and training policies (post-formal schooling) are well co-ordinated
so as to equip students with knowledge and skills that will later be complimentary to
training opportunities provided in the labour market.
OECD DEVELOPMENT CENTRE
Working Paper No. 211
HUMAN CAPITAL FORMATION
AND FOREIGN DIRECT INVESTMENT
IN DEVELOPING COUNTRIES
by
Koji Miyamoto
Preface: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES
Questions Posed: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES
HUMAN CAPITAL FORMATION BY MNES AND TECHNOLOGY TRANSFERS
THE VIRTUOUS CIRCLE OF HUMAN CAPITAL FORMATION, INWARD FDI, AND TECHNOLOGY TRANSFERS
HUMAN RESOURCE DEVELOPMENT AND ATTRACTING INWARD FDI
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About the Author: OECD Development Centre RSS for OECD's articles - Visit OECD's website  Click here to visit OECD's website   Trends in FDI in Developing Countries Background Macroeconomic Shockabsorbers for Africa Questions Posed HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES The Efficiency and Labour Market Impact Have Varied Across Sectors HUMAN CAPITAL FORMATION BY MNES AND TECHNOLOGY TRANSFERS |
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