Labor skills and foreign investment in a dynamic economy : estimating the knowledge-capital model for Singapore Chellaraj, Gnanaraj; Maskus, Keith E.; Mattoo, Aaditya

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Authors
Chellaraj, Gnanaraj ; Maskus, Keith E. ; Mattoo, Aaditya
Appears In
Review of Development Economics
Subjects
Foreign investments -- Analysis; Foreign investments -- Models; Developing countries -- Economic aspects
Audience
Academic
Summary
Byline: Gnanaraj Chellaraj, Keith E. Maskus, Aaditya Mattoo Abstract Singapore is an interesting example of how the pattern of foreign investment changes with economic development. This paper studies inbound and outbound investment between Singapore and a sample of industrialized and developing countries over the period 1984-2007. Singapore's investments from industrialized nations shifted into skill-seeking activities, while its investments in developing countries became concentrated in labor-seeking production. The knowledge-capital model is used to analyze the determinants of these shifts. The estimates suggest that a 10% increase in Singapore's skill differences with developing countries resulted in a 15.2% increase in outbound stocks of investment to the average recipient nation. A 10% decline in skill differences with industrialized countries after 1995 resulted in a 3.6% increase in inbound stocks from the average parent nation. Article Note: We wish to thank James Markusen, Caroline Freund, David Tarr, Shiva Makki, Sumner LaCroix, Shawn Arita, and other seminar participants at the World Bank and the University of Hawaii and the anonymous reviewers for their comments, and Thamnu Sishobhon, Polly Means, Q-H Zhao and Josette Vizmanons for their technical assistance. Financial support from the Multi-Donor Trust Fund of the Development Economics Research Group at the World Bank is also gratefully acknowledged.
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http://trove.nla.gov.au/work/38009
Work ID
38009

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