ABSTRACT
This chapter provides evidence on the importance of human capital in attracting foreign direct investment (FDI) into developing countries. The increase in the share of developing countries in FDI inflows has been accompanied by dramatic diversification in the composition of major FDI recipients. The chapter discusses data concerning the size and distribution of FDI inflows over time and across geographical regions. It describes the sectoral composition of FDI inflows and discusses the importance of human capital in the light of the evolving characteristics of FDI and strategies of multinational corporations (MNCs). The rapid growth of FDI has been accompanied by significant shifts in its sectoral composition and the relative importance of its determinants. The chapter emphasizes the role of human capital and government policy on education in fostering economic development. It explores the relevance of human capital as a pull determinant of FDI in developing countries.
