Impact of FDI on Human Capital Development in BRICS. Does Technology Infrastructure Matter?
Keywords:
Foreign Direct Investment, Technology, Human Capital, BRICSAbstract
Objectives: The paper studied the influence of FDI on human capital development and also if technology infrastructure is a channel or an absorption capacity influencing FDI’s impact on human capital development in BRICS. Prior Work: There is no consensus in the results and findings relating to empirical research on FDI’s impact on human capital development. Approach: Fixed effects and fully modified ordinary least squares (FMOLS) are the two-panel data (1995-2021) analysis methods employed. Results: Fixed effects (models 1 and 2) observed a significant positive relationship running from FDI towards human capital development. Fixed effects (model 3) shows that FDI had a significant negative effect on human capital development. All the three models under FMOLS noted an insignificant deleterious effect of FDI on human capital development. Models 1and 3 (fixed effects and FMOLS) and model 2 (fixed effects) noted that the complementarity between FDI and technology significantly improved human capital development. Implications: BRICS countries are therefore urged to develop and implement policies which are geared towards improving FDI inflows and strengthening technology infrastructure to ensure human capital development. Value: The study indicates that technological diffusion is important in ensuring that FDI’s positive effect on human capital development in BRICS is significant.
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