Skill Upgrading in Developing Countries : Has Inward Foreign Direct Investment Played a Role?

How do multinational firms affect both the demand for and supply of skills in host country labour markets? On the demand side, inward FDI can stimulate demand for skilled workers in host countries through several channels. Most empirical evidence indicates that these channels work mainly within multinationals themselves, rather than through knowledge spillovers to domestic firms. On the supply side, the question of how inward FDI influences the development of human capital is much more difficult to answer. There are two different modes by which multinational enterprises (MNEs) can facilitate investments in human capital. One involves short-term, firm-level activities by which individual firms interact with host country labour markets. The other involves longterm, country-level activities by which MNEs collectively contribute to an overall macro environment where fiscal policy can support and drive education policy ...