The Effects of Human Capital on Attracting Foreign Direct Investment

Abstract

The main purpose of this study is to use cross sectional analysis to examine the effects of three alternative proxies for human capital on attracting FDI inflows and FDI stocks for 114 different countries. The results of this study is consistent with the market-seeking motive of FDI and supports the notion that countries with higher levels of human capital, as measured by school life expectancy or the gross enrollment at schools have been able to attract significant foreign capital into their economies.