Working Paper: CEPR ID: DP7002
Authors: Artjoms Ivlevs; Jaime de Melo
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: brain drain; FDI; migration; trade
JEL Codes: F13; F16; F22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low-skill intensive exports (F66) | emigration of high-skill labor (J61) |
| skill composition of migration (J61) | FDI inflows (F21) |
| emigration of high-skill labor (J61) | FDI inflows (F21) |
| GDP per capita, education levels, political stability (O15) | FDI and migration (F20) |
| emigration of high-skill labor (J61) | positive FDI (F23) |