FDI, the Brain Drain and Trade: Channels and Evidence

Centro Studi Luca d'Agliano Development Studies Working Paper No. 261

University of Nottingham, GEP Research Paper 2008/40

31 Pages Posted: 8 May 2009

See all articles by Artjoms Ivlevs

Artjoms Ivlevs

University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP)

Jaime de Melo

University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR); World Bank

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2008

Abstract

This paper explores the links between the patterns of migration (high vs.low-skill), trade policy, and foreign direct investment (FDI) from the standpoint of sending countries. A skeleton general equilibrium model with a non-traded good and sector-specific labour is used to explore the effects of the skill-composition of exports on FDI. The model suggests that if exports are low-skill intensive, emigration of high-skill labour leads to positive FDI, suggesting that migration and FDI are complements. Cross-sectional analysis using FDI and emigration data for 103 migration-sending countries over the period 1990-2000 finds some support for this conjecture.

Keywords: migration, FDI, brain drain, trade

JEL Classification: F22, F13, F16

Suggested Citation

Ivlevs, Artjoms and de Melo, Jaime, FDI, the Brain Drain and Trade: Channels and Evidence (October 1, 2008). Centro Studi Luca d'Agliano Development Studies Working Paper No. 261, University of Nottingham, GEP Research Paper 2008/40, Available at SSRN: https://ssrn.com/abstract=1399554 or http://dx.doi.org/10.2139/ssrn.1399554

Artjoms Ivlevs (Contact Author)

University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP) ( email )

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Jaime De Melo

University of Geneva - Department of Political Economics ( email )

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Switzerland
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HOME PAGE: http://www.unige.ch/ses/ecopo/demelo/Jaime.html

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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