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THE VIRTUOUS CIRCLE OF HUMAN CAPITAL FORMATION, INWARD FDI, AND TECHNOLOGY TRANSFERS

THE VIRTUOUS CIRCLE OF HUMAN CAPITAL FORMATION, INWARD FDI, AND TECHNOLOGY TRANSFERS

The past two sections described how host developing countries attract MNEs. It is
found that while basic education for all adults is the key starting point, a demand driven
HRD at a higher level is necessary to attract higher value-added MNEs including those in
the recently growing services sector. To further squeeze-out the benefits of FDI, host
countries need to further fine-tune policies to facilitate technology transfers. Even
reaching this point is a difficult task for most host developing countries, especially for
those countries that have historically relied on the primary sector and natural resourcebased
manufacturing in which a high level of human resources deemed less important
an attraction.
This section discusses possible policy options so that the process of inflowing FDI
and technology transfers continuously repeats as in a virtuous circle, for countries that
have at least gradually succeeded in attracting FDI and are moving towards optimising
HRD policies to facilitate technology transfers. What else, apart from the policy
implications mentioned in sections III and IV, is necessary to start and sustain such a
virtuous circle?

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





THE VIRTUOUS CIRCLE OF HUMAN CAPITAL FORMATION INWARD FDI AND TECHNOLOGY TRANSFERS - To learn more about this author, visit OECD Development Centre's Website.

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OECD Development Centre
(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.

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