Foreign Investment and Local Talent: A Dynamic Analysis of the Effects of FDI on the Enablement of Entrepreneurial and Managerial Capabilities in Late Developing Economies (FILT-project)

Supported by: Ministerio de Educación y Ciencia. Dirección General de Investigación. Plan Nacional de I+D+i (Reference: ECO 2012-35266)
From: 2012-01-01 To: 2015-09-30
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Leading Researcher

Puig, Nuria  

IBC Network members

Castro, Rafael


Economists have long recognized the key role of human capital in modern economic growth. This project is aimed at incorporating this important growth factor into the study of international investment through an examination of the effects of foreign direct investment (FDI) on the enablement of local entrepreneurial and managerial talent (LEMT) in late-developing economies. It does so by systematically analysing the development of corporate capabilities (CC) and the recruitment and professional development patterns of executives and directors of subsidiaries, joint ventures and spillovers of foreign multinational enterprises (MNEs) in 20th-century Spain. Local talent is defined here as the stock of knowledge, skills and relationships, embodied in the locally established managers of companies controlled by or with the participation of foreign capital, which facilitate economic action and the production of economic value. Our starting hypothesis is that spillover gains to LEMT are a much more significant outcome from FDI in developing economies than is stated in the academic literature. Because spillovers are indirect, they are difficult to capture using conventional methods of econometric analysis. This is largely because the most appropriate method is to adopt long term, detailed historical analysis of a suitable sample of subsidiaries. This would better identify the actual spillover gains in LEMT themselves (as opposed to indirect measures like labour productivity), and further control for the obvious pitfalls in alternative methods, such as survivorship bias and sample selection. The example of the long term impact of FDI on LEMT in Spain as it developed is proposed as being perhaps the most appropriate available case to study.