Title: Analysis of the influence of human capital development on foreign investment in BRICS countries using a static panel threshold regression model

Authors: Kunofiwa Tsaurai

Addresses: Department of Banking, Risk Management and Finance, University of South Africa, P.O Box 392, UNISA 0003, Pretoria, South Africa

Abstract: The study investigated the threshold level of human capital development that must be reached in order to enhance significant FDI in BRICS countries using Hansen's (1999) static panel threshold regression model. Although theory and majority of empirical studies concur that human capital development is an integral part of FDI locational advantages in the host country, recent literature shows that human capital development not only does it needs to be available but it has to reach a certain minimum level before significant FDI can be received by host countries. It is against this backdrop that the author investigated the minimum threshold level of human capital development that enhances significant FDI in BRICS countries. As expected, human capital development was found to have had a positive influence on FDI in BRICS countries. Moreover, levels of human capital development index above or equal the threshold level of 0.57 were found to have had a more positive and significant impact on FDI, consistent with the recent literature. It is therefore prudent for BRICS countries to put in place mechanisms that promote the growth of human capital development in order to benefit from FDI inflows.

Keywords: foreign investment; human capital development; static; panel; threshold; BRICS countries.

DOI: 10.1504/IJBG.2018.094975

International Journal of Business and Globalisation, 2018 Vol.21 No.2, pp.261 - 270

Received: 10 Mar 2017
Accepted: 15 Mar 2017

Published online: 28 Sep 2018 *

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