Migration and Foreign Direct Investment: Education Matters

Tinbergen Institute Discussion Paper No. 11-136/3

16 Pages Posted: 30 Sep 2011

See all articles by Masood Gheasi

Masood Gheasi

VU University Amsterdam

Peter Nijkamp

VU University of Amsterdam - Department of Spatial Economics; Tinbergen Institute

Piet Rietveld(Deceased)

affiliation not provided to SSRN; Tinbergen Institute

Date Written: September 29, 2011

Abstract

The rapid growth in the foreign-born population in many high and middle-income countries in recent decades has prompted much research on the socio-economic determinants and impacts of immigration. This paper investigates the relationship between the stock of foreign population by nationality living in the UK and the bilateral volume of foreign direct investment (FDI), both inward FDI into the UK and outward FDI from the UK. This study contributes to the literature on the above-mentioned association between migration and FDI, by using the UK annual data from 2001 to 2007 for 22 countries on the inward volume of FDI and for 27 countries on the outward volume of FDI. Our study finds a significant and positive relationship between migration and outward FDI. This result also holds, if we correct for endogeneity by using an instrumental variable approach. If we then include the education level of migrants living in the UK, our results indicate that the more educated migrants from a certain country are, the stronger positive effect they have on FDI in both directions (inward and outward).

Keywords: foreign direct investment, immigration, gravity model, instrumental variable

JEL Classification: F22, P45

Suggested Citation

Gheasi, Masood and Nijkamp, Peter and Rietveld(Deceased), Piet, Migration and Foreign Direct Investment: Education Matters (September 29, 2011). Tinbergen Institute Discussion Paper No. 11-136/3, Available at SSRN: https://ssrn.com/abstract=1935825 or http://dx.doi.org/10.2139/ssrn.1935825

Masood Gheasi (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Peter Nijkamp

VU University of Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands
+31 20 4446091 (Phone)
+31 20 4445611 (Fax)

Tinbergen Institute

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Piet Rietveld(Deceased)

affiliation not provided to SSRN

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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