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
There are 2 versions of this paper
FDI, the Brain Drain and Trade: Channels and Evidence
FDI, the Brain Drain and Trade: Channels and Evidence
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: Suggested Citation
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